What is portfolio

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The group of investments and other assets held by an investor. The office or post of a cabinet member or minister of state. A selection of representative works, as of an artist. The total of the securities consisting of stocks, bonds, certificates of deposit, and so on held by an individual at any one time. Origin of portfolio. From Italian portafoglio ; cognate with the French portefeuille "folder, wallet" , from the Latin verb portare "to carry" and folium "sheet".

The meaning "collection of responsibilities" came by extension in the s. Portfolio Sentence Examples. Related articles. Words near portfolio in the Dictionary.

The hybrid portfolio approach diversifies across asset classes. Building a hybrid portfolio requires taking positions in stocks as well as bonds, commodities, real estate, and even art. Generally, a hybrid portfolio entails relatively fixed proportions of stocks, bonds, and alternative investments.

This is beneficial, because historically, stocks, bonds, and alternatives have exhibited less than perfect correlations with one another. When you use a portfolio for investment purposes, you expect that the stock, bond, or another financial asset will earn a return or grow in value over time, or both.

A portfolio investment may be either strategic —where you buy financial assets with the intention of holding onto those assets for a long time; or tactical —where you actively buy and sell the asset hoping to achieve short-term gains. The underlying assets in an aggressive portfolio generally would assume great risks in search of great returns. Aggressive investors seek out companies that are in the early stages of their growth and have a unique value proposition.

Most of them are not yet common household names. A portfolio that is defensive would tend to focus on consumer staples that are impervious to downturns. Defensive stocks do well in bad times as well as good times. No matter how bad the economy is at a given time, companies that make products that are essential to everyday life will survive. This type of portfolio makes money from dividend-paying stocks or other types of distributions to stakeholders. Some of the stocks in the income portfolio could also fit in the defensive portfolio, but here they are selected primarily for their high yields.

An income portfolio should generate positive cash flow. Real estate investment trusts REITs are examples of income-producing investments. A speculative portfolio is best for investors that have a high level of tolerance for risk. Speculative plays could include initial public offerings IPOs or stocks that are rumored to be takeover targets.

Technology or health care firms in the process of developing a single breakthrough product also would fall into this category. Although a financial advisor can create a generic portfolio model for an individual, an investor's risk tolerance should significantly reflect the portfolio's content.

In contrast, a risk-tolerant investor might add some small-cap growth stocks to an aggressive, large-cap growth stock position, assume some high-yield bond exposure, and look to real estate, international, and alternative investment opportunities for their portfolio.

In general, an investor should minimize exposure to securities or asset classes whose volatility makes them uncomfortable. Similar to risk tolerance, investors should consider how long they have to invest when building a portfolio. In general, investors should be moving toward a conservative asset allocation as their goal date approaches, to protect the portfolio's earnings up to that point.

For example, a conservative investor might favor a portfolio with large-cap value stocks , broad-based market index funds, investment-grade bonds, and a position in liquid, high-grade cash equivalents. Take, for example, an investor saving for retirement who's planning to leave the workforce in five years. Even if that investor is comfortable investing in stocks and riskier securities, they might want to invest a larger portion of the portfolio in more conservative assets such as bonds and cash, to help protect what has already been saved.

Conversely, an individual just entering the workforce may want to invest their entire portfolio in stocks, as they may have decades to invest, and the ability to ride out some of the market's short-term volatility. Portfolio Management. Investing Essentials. Actively scan device characteristics for identification. Use precise geolocation data.