Portfolio management: What it is and how to do it | Vanguard (2024)

FAQs

What is portfolio management answer? ›

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.

IT portfolio management plays a significant role in helping companies maintain a large-scale snapshot of a portfolio's impact and progress. It ensures that organizations meet the financial, personnel, and resource needs of an IT department.

The four distinct types of portfolio management are active, passive, discretionary and non-discretionary management.

Your portfolio should showcase your best and most relevant work, not everything you have ever done. A common mistake is to include too many projects that are not very impressive or do not showcase your skills well. This can dilute your impact and make it harder for the interviewer to see your strengths and potential.

Some individuals do their own investment portfolio management. This requires an in-depth understanding of the key elements of portfolio building and maintenance that make for success, including asset allocation, diversification, and rebalancing.

Portfolio managers need strong skills in the financial industry, including asset management and risk management. They need communication skills to work with clients, set goals and analyze the portfolio to make sure it's profitable. Strong math and computer skills are necessary, too.

The first step is to assess your present financial situation and set clear, quantifiable investment goals. Next, establish your risk-return profile to determine the appropriate balance between potential rewards and acceptable levels of risk.

How to manage a portfolio of clients? ›

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.

Example of Portfolio Management

With a Rs 10,000 investment corpus, a portfolio manager strategically allocates it to various units, such as real estate, mutual funds, and shares. This allocation aligns with the individual's financial goals and risk tolerance, aiming to maximize profitability.

Types of Portfolio Management

Active investment management aims to make the most of the market conditions, especially while the markets are rising. It follows the efficient market hypothesis. In most cases, the passive manager sticks with index funds with low turnover but promises good long-term value.

An ideal diversified portfolio would include companies from various industries, those in different stages of their growth cycle (e.g., early stage and mature), some companies from foreign countries, and companies across a range of market capitalizations (small, mid, and large).

So the portfolio manager according to the risk-taking capacity and the kind of returns calculated provides a portfolio structured in tandem with that. So for example, the portfolio could include real estate, fixed deposits with banks, mutual funds, shares, and bonds.

Portfolio management involves building and overseeing a selection of assets such as stocks, bonds, and cash that meet an investor's long-term financial goals and risk tolerance. Active portfolio management requires strategically buying and selling stocks and other assets to beat the broader market's performance.

Portfolio Management Service (PMS) is a professional financial service where skilled portfolio managers and stock market professionals manage your equity portfolio with the assistance of a research team. Many investors have equity portfolios in their Demat Account but managing them can be a challenge.

Why did you pursue a career as a portfolio manager? The aim of this question is to assess the candidate's reasoning for pursuing a career as a portfolio manager to determine their level of commitment to their work. What to look for in a successful answer: Strong reasoning behind pursuing a career as aportfolio manager.