Portfolio Management Services

What Is Portfolio Management?

• PMS is a concentrated portfolio, which will focus on a particular theme.
• Portfolio management is overseeing a group of investments that meet the long-term financial objectives and risk tolerance of an investor, a company, or an institution.
• Active portfolio management requires strategically buying and selling stocks or other financial instruments.

Components of Portfolio Management

Asset Allocation

• Asset allocation is based on the understanding that different types of asset classes that aims to balance risk and reward by strategically maintaining a portfolio's assets according to an individual's goals, risk tolerance, and investment horizon. The seven main asset classes include - cash and cash equivalents, bonds, derivatives, equities, real estate, gold, commodities, and alternative investments.
• Investors with a more aggressive profile weight their portfolios toward more volatile investments such as growth stocks. Investors with a conservative profile weight their portfolios toward stable investments such as bonds and blue-chip stocks.
• Choosing a right mix of assets provides balance and protects against risk.

Diversification

• The key to wealth management across market cycles is portfolio diversification. It is nothing but distributing your investments across various asset classes.
• The only certainty in investing is that it is impossible to consistently predict winners and losers. The prudent approach is to create a basket of investments that provides broad exposure within an asset class.
• Diversification is spreading risk and reward within an asset class. Because it is difficult to predict which subset of an asset class or sector is likely to outperform another, diversification captures the returns of all of the sectors over time while reducing volatility at any given time.

Rebalancing

• Rebalancing is a process of reviewing the portfolio and taking timely decision on switching investments between asset classes based on performance of the assets.
• Rebalancing generally involves selling high-profit earned securities and putting that money to work in lower-priced securities which has a high potential to grow.
• The quarterly exercise of reviewing the portfolio and rebalancing allows the investor to capture gains and expand the opportunity for growth in high potential sectors while keeping the portfolio aligned with the investor financial goals.