By Research Desk
about 4 years ago

Portfolio or Investment Portfolio refers to the combination of financial assets like stocks, bonds, derivatives, debentures, mutual funds, bullion, property titles, fixed income instruments and cash. This portfolio belongs to a particular entity which may range from an individual investor to a professionally managed investment firm or a bank. Each and every person can design their own portfolio based on the risk appetite, required rate of return, time duration of investment and investment objectives.

A portfolio should be designed in such a way that would maximise the return and minimise the risk. This requires the investors to invest wisely. Sometimes the investors are not able to manage the portfolio well (in terms of return made for the risk borne) and end up having negative or lesser returns than anticipated. In such case, a portfolio manager becomes helpful. These portfolio managers are individuals having huge experience in managing portfolios of their clients by understanding their financial needs and designing a suitable investment plan based on their income expectations, risk appetite and investment objective. These portfolio managers invest on behalf of the client.

Nowadays, Portfolio Managers have started providing Portfolio Management Services (PMS) to clients, wherein they assess the financial needs of the clients and help them grow their portfolio. These services usually focuses on various elements like:

  • Asset Allocation: Portfolio managers make sure that each portfolio should be in the form of mix of assets ranging from long term to short term securities, some securities being more volatile than others. Investors having an aggressive profile will have more volatile securities in their portfolio compared to conservative investors.
  • Diversification: Portfolio managers create a basket of assets as it is impossible to predict exactly which stocks will be gainers or losers. This gives the portfolio a broader exposure and sometimes acts as a natural hedge too.
  • Rebalancing: This strategy is used by the portfolio managers to return a portfolio to its original mix at regular intervals. The process of rebalancing ensures that the stocks which have gained marginally or lost substantially during the period are now rebalanced as per the original composition to keep the risk intact.

Thus, in today’s scenario with such as rising volatility in the stock markets, portfolio managers are preferred by investors to handle their portfolios and provide them healthy returns.


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