What is portfolio management? | APM (2024)

FAQs

What is portfolio management? | APM? ›

Portfolio management is the selection, prioritisation and control of an organisation's programmes and projects, in line with its strategic objectives and capacity to deliver. The goal is to balance the implementation of change initiatives and the maintenance of business-as-usual, while optimising return on investment.

In simple terms, portfolio management is the process of choosing and managing a set of investments to meet the specific financial goals of a company or an individual. There is a science behind selecting the right investment mix for a client and perfectly balancing the risk tolerance.

Some individuals do their own investment portfolio management. That requires a basic understanding of the key elements of portfolio building and maintenance that make for success, including asset allocation, diversification, and rebalancing.

Portfolio management will allow you to consider your past investments while developing your new investment strategy. You can make an informed decision after considering the age factor, risk propensity, income, and budget. This comprehensive decision-making process will eliminate the risk of huge losses.

Steps of Portfolio Management

An investor needs to identify the objective. The outcome achieved can be either capital appreciation or stable returns. Research and analysis should be carried out to estimate expected returns with associated risks. A sound decision should be made on allocating assets.

The key elements of portfolio management include establishing financial goals and risk tolerance, selecting a mix of assets and securities that align with those goals, monitoring and adjusting the portfolio over time, and managing costs.

Investment advisors encompass professionals that can help you with investment management, retirement planning, estate management, tax management, budgeting, debt management, etc. Portfolio managers are typically more focused on helping you invest and managing your investment portfolio.

These are People, Philosophy, Process, and Performance. When evaluating a wealth manager, these are the key areas to think about. The 4P's can be dissected further, but for the purpose of this introduction, we'll focus on these high-level categories.

What is an example of a portfolio management? ›

Examples of Portfolio Management

This investor may invest in blue-chip dividend stocks and bonds for steady cash flow. This strategy involves living off of the cash flow that the assets generate.

Portfolio Management can help organizations determine which Projects, Programs, and other work items should be continued, should be started, or should be stopped. Maybe there's Projects you need to postpone because you don't have enough money or there's not enough resources to cover the resource demand.

There are four main portfolio management types: active, passive, discretionary, and non-discretionary. A successful portfolio management process involves careful planning, execution, and feedback. Investment strategies can assist investors in making an educated choice about an investment.

It is a three-step process that includes planning, implementation, and feedback, with asset allocation, diversification, rebalancing, and tax reduction being the four most common tactics. The four different styles of investment portfolio management include active, passive, discretionary, and non-discretionary.