What is Portfolio Management? An Overview

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Portfolio means the collection of investment tools like stocks, mutual funds, shares, bonds, cash, etc. which an investor collects during their investment journey. Investors can create a portfolio based on their income, budget and time frame. Once a portfolio is created, the main aim is to maximize the returns from these investments, keeping in mind the market volatility and risk exposure.

Investors use a variety of investment products in their portfolios. These include mutual funds, exchange-traded funds, AIFs and other options. Managing them can be a daunting task and this is when,Portfolio Management comes into the picture.

Portfolio Management refers to the act of selecting the right investment policy for individuals so that there is minimal risk and maximum return. Portfolio Management can be defined as the process of managing the money of an individual. This can be done either by the individuals themselves or through the expert guidance of professional Portfolio Managers.

Portfolio management involves various steps like revising the original investment strategy, going through previous targets and studying the market trends closely. Portfolio Managers conduct this process every month or quarter by taking time to calculate the value of all the investments in a portfolio and see how much, the portfolio has shifted from the previously decided target. Next, the portfolio can be rebalanced by selling shares of some sectors and buying shares of, some other sectors so that the rebalancing activity, is following the Portfolio Management Plan.

It must be noted that Portfolio management is not solely about building and managing an investment portfolio. It includes various other concepts like asset allocation which is based on the understanding that different types of assets do not move in the same direction and some are, more volatile than the others. The right mix of assets, provides balance and protects against risks.

Another important concept concerned with portfolio management is Diversification. Diversification involves spreading the risk and reward of individual securities within one asset class or between various asset classes. Diversification seeks to capture the returns of all the sectors over time and also reduces volatility at any given time. Diversification must be made across various classes of securities, sectors of the economy and geographical regions.

Portfolio management decisions are guided by several factors like an individual’s goals, deciding if they need the services of a professional portfolio manager, determining a timeline and assessing one’s tolerance for risk. Once all these aspects are decided, it involves creating an investment strategy based on a client’s financial needs and risk tolerance. It also helps in providing an ongoing portfolio oversight. One can also adjust their holdings when required.

Portfolio management is an important process that must be followed by every investor because it helps in reducing the impact of adverse events in the portfolio. It is very important to manage portfolios perfectly and keep in mind, life-changing events like unemployment, childbirth, retirement plan, etc. to achieve their goals systematically. As a prudent measure, a successful investor should rebalance their stock portfolio at least every financial quarter and ideally every month.

At mastertrust, we have gained expertise in offering professional portfolio management services. Moreover, we enable clients to keep a track of their portfolio with regular reviews and risk management. This makes it easy for investors to maximize their returns and create wealth over the long term.

Our seasoned professionals who have considerable experience in portfolio management, manage the portfolio strategically and keep you updated with the latest market trends and factors that you should consider while trading or investing in the stock market. We understand your financial goals and objectives and offer customized investment solutions so that our clients can meet their financial needs and also create wealth in the long run.