Portfolio-Management is used to select a portfolio products that help in maximize the profitability or value of the portfolio and to provide balance. Before we go in detail about portfolio management we first need to understand what exactly portfolio means. Portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, as well as their mutual exchange-traded and closed-ended fund counterparts.
Investors should construct an investment portfolio in accordance with risk tolerance and return requirements. Imagine a pie that is divided into pieces of varying sizes, investment portfolios are just the same representing a variety of asset classes or types of investments to accomplish an appropriate risk-return portfolio allocation.
Portfolio Management:-
Now that we know about Portfolio, it can be said that portfolio management is the art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals as well as institutions, and balancing risk against performance. There are two forms of portfolio management:
- Passive management
- Active management
Passive management simply tracks a market index, commonly referred to as indexing also known as index investing. Active management involves a single manager, co-managers, or a team of managers, based on research and decisions on individual holdings attempt to beat the market return by actively managing a fund's portfolio through investment decisions.
Source :- http://indianmoney.com/article-display.php?cat_id=1&sub_id=12&aid=846&acat=&ahead=Portfolio%20Management%20-%20An%20Overview...%21%21%21
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