What Is The Meaning of Portfolio Management?

PORTFOLIO MANAGEMENT:

Portfolio management means selection of securities and constant shifting of the portfolio in the light of varying attractiveness of the constituents of the portfolio. It is a chance of selecting and revising spectrum of securities to it in with the characteristics of an investor. Markowitz analyzed the implications of the face that the investors, although seeking high expected returns, generally wish to avoid risk. It is the basis of all the scientific portfolio management. Although the expected return on a portfolio is directly related to the expected return on component securities, it is not possible to deduce portfolio riskness simply by knowing the riskness of individual securities. The riskness of portfolio depends upon the attributes of individual securities as well as the interrelationships among securities.

A professional, who manages other people or institutions investment portfolio with the object of profitability, growth and risk minimization, is known as a portfolio manager. He is expected to manage the investor’s assets prudently and choose particular investment avenues appropriate for particular times aiming at maximization of profit. Portfolio management includes portfolio planning, selection and construction, review and evaluation of securities. The skill in portfolio management lies in achieving a sound balance between the objectives of safety, liquidity and profitability.