It is a process through which one selects the securities, the derivatives, and other assets to include in a portfolio. It is required to consider the risks and the returns that affect individual security and the portfolio as well. According to certain objectives, there is a set of portfolios that are considered. Out of those, the best portfolio is selected and that is called portfolio optimization. There is another term that is associated with this concept that is the Investment Portfolio. It can be defined as a collection of assets of an individual or any entity or institution.
When you select the optimum mix of securities, with the expectations of receiving the maximum amount of returns also by taking the maximum risks, then it is called portfolio construction.
A working portfolio, as the name suggests is about a work of any kind. Work that is under progress or even the work that is completed. This kind of portfolio can be saved for future use as a display portfolio. It is used to serve as a reservoir for the student’s work. The working portfolio can be also used to discover the needs of the students. It also helps the teachers and the students in knowing the strengths and weaknesses of the students.
The display portfolio is about the best works of the students that the teachers decide to display. The work that makes the students proud, the best work gets displayed as a mark of their hard work innovativeness and creativity. The display portfolios may also be maintained every year to experience growth over the years.
The assessment portfolio has content that includes what the student has learned. The portfolio includes the curriculum that the students can enhance their learning process from.
When you make decisions about investment mix and policy, making investments that match with the objectives and even balancing the risk against performance it is called portfolio management.
This is the first step of business portfolio planning. The portfolio manager, after understanding the needs and the wishes of the client, and accordingly design an investment policy statement. That statement consists of the objectives and the constraints of the client.
Asset allocation is done under this step. In this step, the portfolio manager decides what asset classes must be included in the client’s portfolio and in what proportion too. This needs to be decided by the portfolio manager.
Do you think a portfolio manager’s job is limited to constructing a portfolio? He/she should monitor the portfolio at regular intervals. The manager also analyses how well the portfolio has performed, the contributions of the assets, whether the decided objectives have met, etc. So all these are checked and monitored in this step.