Discuss the different phrase in portfolio Management.
Portfolio Management is complex process, which tries to make investment activity more regarding and less risk. In a word we can say Portfolio Management is provides how to maximum returns without minimum risk. Portfolio Management comprises all the processes involved in the creation and maintenance of an investment portfolio. Five phases can be identified in this process. As following-
- Security analysis: Security analysis is the initial phases of the portfolio management process. This step consists of examining the risk-return characteristics of individual securities.
- Portfolio analysis: Portfolio analysis phase of portfolio management consists of identifying the range of possible portfolios that can be constituted form a given set of securities and calculation their return and risk for further analysis.
- Portfolio selection: Portfolio selection phase of portfolio management consists of the goal of portfolio construction that provides the highest returns at a given level of risk. By this set of efficient portfolios, the optimal portfolio has to be selected for investment.
- Portfolio revision: Portfolio revision is an important in the entire process of portfolio management. Some investor-related changes such as availability of additional funds, change in risk attitude, need of cash for other alternative uses.
- Portfolio evaluation: Portfolio evaluation is useful in yet another way. It provides a mechanism for identifying weaknesses in the investment process and for improving these deficient areas. It provides a feedback mechanism for improving the entire portfolio management process.
Each phase is an integral part of the whole process and the success of portfolio management depends upon the efficiency in carrying out each of these phases.
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