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Portfolio Management

Portfolio Management

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Published by Ratish Kakkad
Portfolio Management
Portfolio Management

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Published by: Ratish Kakkad on Aug 29, 2013
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03/15/2014

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PORTFOLIOmanagement
What is a Portfolio?
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In finance, a
portfolio
is an appropriate mix of or collection of investments held by an institution or a private individual.Holding a portfolio is part of an investment and risk-limiting strategy calleddiversification. By owning several assets, certain types of risk (in particular specific risk) can be reduced. The assets in the portfolio could include
,
,
, 
, 
,
, production facilities, or anyother item that is expected to retain its value.In building up an investment portfolio a financial institution will typically conductits own investment analysis, whilst a private individual may make use of theservices of a financial advisor or a financial institution which offers portfoliomanagement services.
Meaning of Portfolio:
 Portfolio means combined holding of many kinds of finanacial securities i.e.shares, debentures, government bonds, units and other financial assets. Making a portfolio means putting one’s eggs in different baskets with varying elementsof risks and return. The object of portfolio is to reduce risk by diversificationand maximise gains.
The term investment portfolio refers to the various assets of an investor which areto be considered as a unit. Thus, an investment portfolio is not merely a collection
 
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of unrelated assets but a carefully blended asset combination within a unifiedteamwork. It is necessary for investors to take all decisions regarding their wealth position in a context of portfolio.
 What is
 
Portfolio Management
?
Portfolio management
involves deciding what assets to include in the portfolio,given the goals of the portfolio owner and changing economic conditions.Selection involves deciding what assets to purchase, how many to purchase, whento purchase them, and what assets to divest. These decisions always involve somesort of performance measurement, most typically
on the portfolio,and the risk associated with this return (i.e. the
of the return).Typically the expected returns from portfolios of different asset bundles arecompared.Portfolio management means selection of securities and constant shifting of  portfolio in the light of varying attractiveness of the constituents of portfolio. It isa choice of selecting and revising spectrum of securities to it in with thecharacteristics of an investor. Management means utilisation of resources in the best possible manner. Portfolio management involves maintainng a proper combination of securities which comprise the investor’s portfolio in such amanner that they give maximum return with minimum risk. This requires formingof a proper investment policy which is a policy of formation of guidelines for allocation of available funds among the various types of securities.
 
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