Portfolio is a group of financial assets such as stocks, bonds and cash equivalents. It is a collection of investments all owned by the same individual or organization. Portfolios are held directly by investors or managed by financial professionals. It should show a spread of investments to minimize risk.
Portfolio management is about analyzing strengths, weaknesses, opportunities and threats in the choice of debt vs. equity, domestic vs. international, growth vs. safety and many other trade offs encountered in attempt to maximize return at a given level of risk.
Some major tasks involved with Portfolio management are:
1. Taking decisions about investment mix and policy.
2. Matching investments to objectives
3. Asset allocation for individuals and institution
4. Balancing risk against performance.
There are two types of portfolio management i.e.
PASSIVE MANAGEMENT: It involves tracking of the market index or index investing.
ACTIVE MANAGEMENT: It involves active management of a fund’s portfolio by manager or a team of managers who take research based investment decisions and decisions on individual holdings.