Functions of portfolio

Functions of portfolio
Primary topic
Related topics
Methods and techniques

Main functions of portfolio analysis method involves identification and evaluation of all products or service groups offered by company on the market. Other basic functions of portfolio are:

Portfolio selection models[edit]

A good portfolio goes beyond than a wide and a long list of good shares and bonds. It should be a well balanced integrity which gives the particular investor protection and chances to achieve the goal, in economic reasoning, we talk about returns on investment. The investor ought to keen on building an portfolio which will suit all his needs and demands.

Whenever we try to build a portfolio, we can not forget about uncertainty, very important or even the salient characteristic of security investment. Although, the economic factors were taken under consideration and were understood perfectly, non-economical influence might slip in and change the course of whole prosperity, market's level etc. Such examples as huge fire of acres of forest, devastating drought – all may struck gains of capital or dividends of one or greater amount of securities.

Analytical models[edit]

Analysis of a portfolio starts with detailed informations regarding to personal securities. Going forward into analysis it should end with a summary taking into consideration portfolio as a whole. One of the main sources of information is the previous performance of each securities. Secondly, informations should be sourced out of the predictions about the future performance. When we consider past performance of securities as the inputs within our analysis model the outcome of that analysis will be portfolios which where efficient, especially, in the past. When we take beliefs, predictions of security analysis as the inputs, outcome will be simple, implications of these predictions for better and feeble portfolios. Portfolio theory is being related to various methods of portfolios selection under relevantly risky conditions. Moving forward into this theory, the future return on chosen portfolio is estimated on a probability diversification that includes within account the investor's utility function.

  • The Mean-Variance (MV) model describes the optimum portfolio as the portfolio that reduces to minimum subject's variety to the restriction of a given significant return.

References[edit]

Author: Grzegorz Szewczyk