PRESENTED by, S.

AISWARYA

INVESTMENT PORTFOLIO
The term portfolio refers to any collection of financial assets such

as stocks, bonds and cash. Portfolios may be held by individual investors and/or managed by financial professionals, hedge funds, banks and other financial institutions.

A portfolio's asset allocation may be managed utilizing any of the following

investment approaches and principles: equally-weighting, capitalizationweighting, price-weighting, risk parity, capital asset pricing model, arbitrage pricing theory, jensen index, treynor index, shape diagonal (Index) model, value at risk model, modern portfolio theory and others.

TYPES OF PORTFOLIO

The Aggressive Portfolio An aggressive portfolio or basket of stocks includes those stocks with high risk/high reward proposition. Stocks in the category typically have a high beta, or sensitivity to the overall market.

The Defensive Portfolio

Defensive stocks do not usually carry a high beta, and usually are fairly isolated from broad market movements. Cyclical stocks, on the other hand, are those that are

most sensitive to the underlying economic "business cycle.

The Speculative Portfolio A speculative portfolio is the closest to a pure gamble. Finance suggest that a maximum of 10% of one's investable assets be used to fund a speculative portfolio. Speculative "plays" could be initial public offerings (IPOs) or stocks that are rumored to be takeover targets.

The Hybrid Portfolio Building a hybrid type of portfolio means venturing into other investments, such as bonds, commodities, real estate and even art. Basically, there is a lot of flexibility in the hybrid portfolio approach.

The Income Portfolio An income portfolio focuses on making money through dividends or other types of distributions to stake holders. These companies are somewhat like the safe defensive stocks but should offer higher yields. An income portfolio should generate positive cash flow. Real estate investment trusts (REITs) and master limited partnerships (MLP) are excellent sources of income producing investments.

Portfolio investment types basic understanding of asset allocation

There are two kinds of investment way, ie direct investment and portfolio
investment.
Direct investment is done by embed capital investment into real assets,

such as opening of factories, infrastructure projects, setting up some

financial companies, and others.
Portfolio investment is embedding of money to one countrys / regions

financial instrument, such as investment in bond market or stock investing.

The Advantages of Portfolio Investment

Unlike the investment approach of classic security analysis that focuses on

individual security selection, portfolio investment is a modern investment

method that involves asset allocation and diversification to construct a

collection of investments.
portfolio investment can hedge investment risks by canceling out different

investment returns among component investments.

Risk Diversification and Reduction

Portfolio investment is about reducing risk rather than increasing return. It

may well be that in certain years, individual investment returns based on security analysis exceed returns from portfolio investment

Minimal Security Analysis

Traditional security selection requires considerable efforts in terms of time

and resources to perform the so-called three-step analysis of economy, industry and company.
Although portfolio investment involves assembling a collection of

individual securities, the focus is less about the merits of each security standing alone but more about how they may fit with the expected overall performance of the portfolio.

systematic investment approach

As portfolio investment moves away from mere individual security

selections, it employs a systematic investment approach that is supposed to

benefit the owner of the investment portfolio in the long run.

Active investment approach

Active investment management of constant buying and selling increases

transaction costs and has tax implications that can be especially when a short-term holding period results in capital gains taxed as ordinary income.