Portfolio management is the process of managing a portfolio consisting of a collection of investments. Its purpose is to ensure that each investment provides maximum returns in accordance with the objectives set by the group or manager.
Objectives of Portfolio Management
The five main objectives are:
Diversification
Diversification involves different asset classes within a portfolio, including currency and equity.
Risk Control
Risk control strives to reduce risk and increase the returns from an investment portfolio by taking into account diversification, market timing and volatility.
Performance Enhancement
Performance enhancement focuses on enhancing performance using both technical trading strategies such as trend following and hedging and non-technical strategies such as value investing and fundamental analysis.
Income Maximization
Income maximization aims to maximize income through dividends, interest payments, capital gains, or other sources in line with the goals of a group or manager.
Portfolio Turnover
Portfolio turnover refers to the frequency at which investors make changes to their portfolios based on market conditions and changes.