Portfolio management

Portfolio management

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   A portfoliois a collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including closed- end funds and exchange-traded funds (ETFs).  People generally believe that stocks, bonds, and cash comprise the core of a portfolio. Though this is often the case, it does not need to be the rule. A portfolio may contain a wide range of assets including real estate, art, and private investments.  You may choose to hold and manage your portfolio yourself, or you may allow a money manager, financial advisor, or another finance professional to manage your portfolio. 2
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  3 .  People generallybelieve that stocks, bonds, and cash comprise the core of a portfolio. Though this is often the case, it does not need to be the rule. A portfolio may contain a wide range of assets including real estate, art, and private investments.
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  ,  You maychoose to hold and manage your portfolio yourself, or you may allow a money manager, financial advisor, or another finance professional to manage your portfolio. 4
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   One ofthe key concepts in portfolio management is the wisdom of diversification—which simply means not to put all your eggs in one basket.  Diversification tries to reduce risk by allocating investments among various financial instruments, industries, and other categories. It aims to maximize returns by investing in different areas that would each react differently to the same event.  There are many ways to diversify. How you choose to do it is up to you. Your goals for the future, your appetite for risk, and your personality are all factors in deciding how to build your portfolio 5
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   Portfolio Managementis defined as the art and science of making decisions about the investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk against performance. 6
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   Portfolio managementrefers to managing an individual’s investments in the form of bonds, shares, cash, mutual funds etc so that he earns the maximum profits within the stipulated time frame. It is the art of managing the money of an individual under the expert guidance of portfolio managers. 7
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   It isthe detailed SWOT analysis (strengths, weaknesses, opportunities, and threats) of an investment avenue, which could be in the form of debt/equity, domestic/international, with the goal of maximizing return at a given appetite for risk. 8
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   Types ofPortfolio Management  There are majorly four types of portfolio management methods:  Discretionary portfolio  Non discretionary  Active Portfolio  Passive portfolio 9
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   Types ofPortfolio Management  There are majorly four types of portfolio management methods:  Discretionary portfolio management: In this form, the individual authorizes the portfolio manager to take care of his financial needs on his behalf.  Non discretionary portfolio management: Here the portfolio manager can merely advise the client what is good or bad, correct / incorrect for him, but the client reserves the full right to take his own decisions. 10
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   Passive portfoliomanagement: It is the form which involves only tracking the index.  Active portfolio management: This includes a team of members who take active decisions based on hard core research before investing the corpus into any investment avenue. (e.g. close ended funds). 11
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   In thecurrent scenario where there is quality money in the markets, portfolio management is indeed a preferred method of making investments. 12
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