Portfolio management is the art of selecting and managing a group of investments that meet the long-term financial objectives of a client, a company, or an institution.
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Portfolio management requires the ability to weigh strengths and weaknesses, opportunities, and hazards across the full spectrum of investments. The choices involve trade-offs, from debt versus integrity to domestic versus international and growth versus security.
Portfolio management may be either Passive Management or Active Management in nature.
Passive Management: It is a set it and forget it long-term strategy. It may involve investing in one or more exchange-traded index funds (ETF).
Active Management: It involves attempting to knock the performance of an index by actively buying and selling individual stocks and other assets. Closed-End funds are generally actively managed.
Portfolio management individuals present the best investment plan as per their income, budget, age, and ability to undertake risks. Portfolio management minimizes the risks committed to investing and also increases the chance of making profits. Portfolio managers understand the client’s financial needs and suggest the best and unique investment policy for them with zero risks associated. Portfolio management enables the portfolio managers to provide tailored investment solutions to clients as per their needs and requirements.