PORTFOLIO-MANAGEMENT

Through his paper, Liquidity Preference as “Behavior Towards risk”, James Tobin popularized the Portfolio Balance Approach, a concept of portfolio management which later became an important post-Keynesian development. He liberated the idea of the speculative demand for money from its dependence on expectations regarding the future changes in the interest rate and has worked away from the assumption that the only alternative of holding cash balances is to hold a single-maturity bonds as well as other assets, apart from money, can be liquid. The discipline concentrates on decisions regarding the mixture of investment and policy to attain the objectives of investment by minimizing risk for individuals and organizations is termed as portfolio-management. It involves SWOT – strength, weaknesses, opportunity, and threat – analysis while considering investment in assets- debt, equity, domestic, international, and so on.


Portfolio-management offers you track of all the investment, assets and cash-flow done by your manager and his team, regularly updated. It gives you a complete account of all the mutual-funds, securities, unit link plans or gold purchases, and keeps information regarding the appreciation/depreciation in their values. It keeps a record of your capital gains in the current and past financial-year and tax-status. It maintains a complete history of the transactions that are done in your ULIPs, mutual-funds, and stocks for different fiscal-years. They help you update your mutual-fund Systematic Investment Plan (SIP) installments, current and future, in two simple-steps. They also follow funds and stocks before deciding for them to invest, and can also set a trigger-price – price at which an order gets triggered from the stop-loss book, where orders are placed to minimize the loss. The team compares the portfolio against various indices, and, finds out the historic and current dividends for your stocks. Asset risk calculates capacity for risk taking and its tolerance-level.


Portfolio-management can be divided into, active-management and passive management. Active-management entails analysis, technical, fundamental and many others, to trade regularly. The manager and his team decide about the securities to include it in the portfolio or mutual-fund. Very often, active portfolio-management work under a set of rules, for instance, sometimes the money-manager might buy growths stocks for a certain amount and blue-chip for another. Nonetheless, the basic foundation of active-portfolio-management still remains the same that the return for the investor can be maximized by trading securities on a regular basis. To cite an example, a manager or his team may buy share X after selling Y, then, on the next day the team may buy Z by selling X, and so on. On the other hand, under passive portfolio-management the manager and his team take decision to include a particular security in a portfolio or fund and leave it unchanged over considerable length of time, e.g., they buy shares of company XYZ and hold them for a period of five or ten years.