📘 What is Portfolio Management?
- It is the process of selecting, managing, and monitoring a set of investments (stocks, mutual funds, gold, FDs, etc.) to meet specific financial goals and risk levels.
- Types:
- Active Portfolio Management (frequent changes)
- Passive Portfolio Management (long-term holding/index-based)
✅ Why Portfolio Management is Important
- Helps in diversification to reduce risk
- Aligns with goals (retirement, education, income, etc.)
- Maximizes returns with proper asset allocation
- Prevents emotional and random trading decisions
🧱 Core Elements of Portfolio Management
1. 🎯 Goal Setting
- Short-term, medium-term, long-term goals
- Retirement planning, house purchase, child education, etc.
2. 💡 Risk Profiling
- Conservative (low risk)
- Moderate (balanced)
- Aggressive (high risk / equity focused)
3. 💰 Asset Allocation
Split portfolio into:
- Equity (stocks, equity mutual funds)
- Debt (bonds, debt funds)
- Gold
- Real estate
- Cash equivalents
4. 📊 Stock Selection Criteria
- Fundamental analysis (PE, ROE, Debt/equity, growth)
- Technical analysis (if active trader)
- Sector allocation
5. ⚖️ Diversification Strategy
- Across sectors (IT, Pharma, Banking, etc.)
- Across market cap (Large Cap, Mid Cap, Small Cap)
- Across asset classes
🛠️ Portfolio Monitoring & Review
- Review quarterly or monthly
- Check for underperforming assets
- Rebalance portfolio (e.g., if equity becomes 80%, bring back to 60%)
- Adjust according to life goals or major events
📈 Performance Metrics
- CAGR (Compounded Annual Growth Rate)
- Risk-adjusted return (Sharpe Ratio)
- Drawdown (max loss from peak)
- Portfolio Beta (volatility compared to market)
🧮 Sample Portfolio Structure (Moderate Risk Example)
| Asset Class | Allocation |
|---|---|
| Equity (Stocks/ETF) | 50% |
| Mutual Funds | 20% |
| Debt (FD/Bonds) | 15% |
| Gold (SGB, ETF) | 10% |
| Cash/Liquid Funds | 5% |
📂 Portfolio Management Tools
- Smallcase (for theme-based portfolios)
- Tickertape, ET Money, Groww for tracking
- Excel or Google Sheets (custom tracker)
- Value Research Online – mutual fund tracking