3. Portfolio
Portfolio means combined holding of many kinds of
financial security that is shares, debentures,
government bonds, units and other financial assets.
Making a portfolio is putting one’s egg in different
baskets with varying elements of a risk and return.
Thus, a portfolio is a combination of various
instrument of investment. It is also combination of
securities with different risk return characteristics.
4. Portfolio Management
Portfolio management is the process
of selecting, combining and managing
of various securities or investments,
known as portfolio, to achieve specific
financial objectives of an individual, a
company or an institution.
6. Purposes
Primary purpose of
portfolio management
is to manage risk by
diversifying
investments so that
investors can reduce
their exposure to
market volatility.
Risk
Management
The asset allocation
and security
selection is done to
increase the value
of investment
Value
Maximization
Manages the
investors assets
prudently and choose
particular investment
avenues
aiming at maximization
of profit.
Management
of funds
An investment can be
converted into cash.
Portfolio
management ensures
Investment are liquid
as well as
marketable..
Liquidity
7. 3/4/2023 7
By selecting investments that
align with the investors goals
and risk tolerance, portfolio
managers help investors achieve
desired financial outcomes.
Meeting financial goals
It aims to achieve growth in the
portfolio’s value over time. It involves
investing in securities that have the
potential for higher returns.
Creation of wealth
Portfolio management aims to create
a portfolio with investments and
assets in different classes to balance
return and risk in the portfolios.
Balance of asset mix
Portfolio management helps to
construct the portfolio that match
the investors risk potential.
Safety of investment
Helps to determine financial
and recourse capacity by
comparing target spending
and planned spending.
Determine financial and
recourse capacity