PORTFOLIO MANAGEMENT Meaning and
Definition
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Portfolio management is the process of strategically managing a collection of investments, assets, or projects to achieve specific financial objectives. It involves the analysis, selection, and allocation of resources across different investment options in order to maximize returns while minimizing risks.
At its core, portfolio management aims to strike a balance between risk and reward by diversifying investments. The goal is to construct a well-diversified portfolio that spreads investments across different asset classes such as stocks, bonds, real estate, and commodities, as well as across various industries and regions. By diversifying, portfolio managers aim to reduce the overall risk of the portfolio by not relying too heavily on any single investment.
Portfolio managers typically assess the risk appetite of the investor or the organization they work for and use this information to determine the appropriate asset allocation. They continually monitor and evaluate the performance of the portfolio, making adjustments as necessary to ensure it remains aligned with the investor's objectives and market conditions.
Furthermore, portfolio managers also aim to enhance portfolio performance through active management strategies, such as market timing, asset selection, and performance evaluation. They analyze market trends, economic indicators, and company-specific financial information to identify potential investment opportunities or risks.
In summary, portfolio management is the process of strategically constructing, monitoring, and adjusting a diversified investment portfolio to achieve specific financial goals by effectively balancing risk and return.
Common Misspellings for PORTFOLIO MANAGEMENT
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Etymology of PORTFOLIO MANAGEMENT
The term "portfolio management" is derived from two separate origins: "portfolio" and "management".
1. Portfolio:
The word "portfolio" has its roots in the Latin word "portare", meaning "to carry", and "folium", meaning "sheet" or "leaf". In the 18th century, the meaning of "portfolio" extended from referring to a case for carrying loose papers to encompassing a collection of various documents, drawings, or photographs. Over time, portfolio began to represent a collection of investments or assets held by an individual or an organization.
2. Management:
The term "management" has its origins in the Latin word "manus" (hand) and "agere" (to drive). It initially referred to the act of handling or controlling horses, but evolved to encompass the act of directing or controlling various activities or resources.
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