Portfolio Management

The art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk against performance is referred to as Portfolio Management. It is all about finding strengths, weaknesses, opportunities and threats in the choice of debt vs. equity, domestic vs. international, growth vs. safety, and many other tradeoffs encountered in the attempt to maximize return at a given appetite for risk.

In a layman’s language, the art of managing an individual’s investment is called as portfolio management.

Foredeals of Portfolio Management

• It presents the best investment plan to the individuals as per their income, budget, age and ability to undertake risks.
•  By minimizing the risks involved in investing, it also enhances the chance of making profits.
•  It enables the portfolio managers to provide customized investment solutions to clients by understanding their financial needs and suggesting the best and unique policy to them.

Types

• Active PM: As the name suggests, in an active portfolio management service, the portfolio managers are actively involved in buying and selling of securities to ensure maximum profits to individuals.
• Passive PM: Here, the portfolio manager deals with a fixed portfolio designed to match the current market scenario.
• Discretionary PM services: In this, an individual authorizes a portfolio manager to take care of his financial needs on his behalf. The individual issues money to the portfolio manager who in turn takes care of all his investment needs, paper work, documentation, filing and so on. The portfolio manager has full rights to take decisions on his client’s behalf.
• Non-Discretionary PM services: In non discretionary portfolio management services, the portfolio manager can merely advise the client what is good and bad for him but the client reserves full right to take his own decisions.

Portfolio Manager

He is an individual who understands the client’s financial goals and objectives and designs a suitable investment plan as per his income and risk taking abilities. He counsels the clients and advises him the best possible investment plan which would guarantee maximum returns to the individual.

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