Portfolio Management

A portfolio is a collection of assets. The assets may be physical or financial like Shares, Bonds, Debentures, Preference Shares, etc. The individual investor or a fund manager would not like to put all his money in the sares of one company, that would amount to great risk. He would therefore, follow the age old maxim that one should not put all the egges into one basket. By doing so, he can achieve objective to maximize portfolio return and at the same time minimizing the portfolio risk by diversification.

 Portfolio management is the management of various financial assets which comprise the portfolio.

 Portfolio management is a decision – support system that is designed with a view to meet the multi-faced needs of investors.

 According to Securities and Exchange Board of India Portfolio Manager is defined as: “portfolio means the total holdings of securities belonging to any person”.

 PORTFOLIO MANAGER means any person who pursuant to a contract or arrangement with a client, advises or directs or undertakes on behalf of the client (whether as a discretionary portfolio manager or otherwise) the management or administration of a portfolio of securities or the funds of the client.

 DISCRETIONARY PORTFOLIO MANAGER means a portfolio manager who exercises or may, under a contract relating to portfolio management exercises any degree of discretion as to the investments or management of the portfolio of securities or the funds of the client.


 To frame the investment strategy and select an investment mix to achieve the desired investment objectives

 To provide a balanced portfolio which not only can hedge against the inflation but can also optimize returns with the associated degree of risk

 To make timely buying and selling of securities

 To maximize the after-tax return by investing in various tax saving investment instruments.



In this type of service, the client parts with his money in favour of the manager, who in return, handles all the paper work, makes all the decisions and gives a good return on the investment and charges fees. In the Discretionary Portfolio Management Service, to maximise the yield, almost all portfolio managers park the funds in the money market securities such as overnight market, 18 days treasury bills and 90 days commercial bills. Normally, the return of such investment varies from 14 to 18 percent, depending on the call money rates prevailing at the time of investment.


The manager functions as a counsellor, but the investor is free to accept or reject the manager‘s advice; the paper work is also undertaken by manager for a service charge. The manager concentrates on stock market instruments with a portfolio tailor-made to the risk taking ability of the investor.