Portfolio management involves creating an investment portfolio for individuals based on their income, budget, age, and risk tolerance. It aims to minimize risk and maximize returns through diversification across different asset classes like stocks, bonds, and mutual funds. A portfolio manager evaluates various investment options and recommends an optimal mix tailored to the client's needs and objectives. The expected return on the overall portfolio is a weighted average of the returns of the individual assets within it, with weights being the proportion of investment in each asset. This allows portfolio managers to adjust weights to achieve a target return level for clients.