SPOTLIGHT ON

Building and Managing

Your Portfolio
DC Capital from London shares a portfolio snapshot during the
2019 Global Finale at Wharton in Philadelphia.

One of your key investment competition tasks is to build and manage a portfolio of stocks that reflects
your investment strategy and your client’s goals. An investment portfolio is a collection of financial
assets — including, for example, stocks, bonds and mutual funds — that is strategically constructed to
accomplish a specific financial goal. This competition only allows investment in stocks from an approved
stock list, though you may want to consider other assets in your overall strategy (not a requirement).
Managing a portfolio is serious business, involving investment mix and policy, matching investments
to objectives and balancing risk and performance. For professional portfolio managers, a key concern
involves matching an individual’s risk tolerance with investment performance in a way that achieves the
investor’s monetary goals.
Two prominent portfolio management styles are passive and active. A passive investment strategy is also
often called “index investing.” It means investors don’t try to guess the future moves in the individual
stocks or in the market as a whole: they buy stocks for their portfolio according to the style rule (Large
Stocks/Growth Stocks) and hold them. The goal is typically to imitate the returns on a pre-specified
benchmark index, like the Dow Jones Industrial Average.
In contrast, active investors attempt to beat the return on that
EXPLORE AND LEARN MORE:
index using their judgement and trading skill. This involves an active
Take a look at these Knowl-
process of stock selection. Active investors also choose to predict
edge@Wharton HS articles to
the short-term moves in the benchmark or individual stocks. This is better understand the world of
often referred to as a process of “market timing,” moving in and out portfolio development and man-
agement:
of a financial market or switching between asset classes based on
• The Investor Lifecycle:
investor predictions.
Changing Priorities,
Keep in mind that you are primarily developing a long-term strategy Changing Portfolios
• Portfolio Managers: The
to build your client’s wealth!
Challenge Is Choosing More
than One Winning Stock

WHARTON GLOBAL YOUTH EXPLORES INVESTING

©2020 The Wharton School, The University of Pennsylvania
 WHARTON GLOBAL YOUTH EXPLORES INVESTING

Wharton Global Youth Voices:

“To actively manage your investments, you have to train yourself mentally
and understand your psychology. You have to realize that sometimes there
will be inefficiencies or you will make the wrong move, but if you constantly
work at improving yourself, you can be successful.”
—Patrick Goldin, young investor featured in KWHS.

From the Experts:

“I don’t believe in market timing and jumping in and out of stocks as a way
to capture short-term stock price movements. I don’t think it pays to try to
catch every up and down of the market. Instead, invest in something you
know about because then you may have a better idea of what products or
services will win out in the marketplace.” And how do you know about the
stocks you choose? Do your analysis!
—Rosella Bannister, Jumpstart Coalition for Financial Literacy

©2020 The Wharton School, The University of Pennsylvania