Benefits of Fantasy Sports Leagues
In the previous article, we have already seen what fantasy sports leagues are. We also know why sports leagues across the world are trying to associate themselves with fantasy sports companies. This is despite the fact that such sports companies are also heavily criticized by one section of society and they are often said to […]
Functions of a Central Bank
The modern banking system is two tiered. This means that at the bottom there are commercial banks i.e. the banks that we interact with on a day to day basis. They are then managed by a central bank which forms the next level in the hierarchy. The modern banking system provides central banks with considerably […]
Disadvantages of Omnichannel Retailing
In the previous article, we have explained the concept of omnichannel retailing. We have also seen how it is different from multichannel retailing and what are some of the benefits of using omnichannel retailing. However, there are many critics who believe that omnichannel retailing is only good in theory. When it comes to real life, […]
Gordon Growth Model: Pros and Cons
The Gordon growth model is a well known and widely known model for valuing equity securities. However, as with every model, there are some pros and cons that need to be understood before this model is applied. Understanding of these pros and cons will help differentiating between situations wherein it would be prudent to apply […]
John Law and the Mississippi Bubble
The Mississippi bubble is one of the biggest asset bubbles known to the modern world. This bubble first led France out of bankruptcy and straight into prosperity. Then this same bubble caused the opposite to happen, bankrupted France and gave an impetus to the revolution. This bubble was created when John Law, a renegade Scotsman […]
A combination of various investment products like bonds, shares, securities, mutual funds and so on is called a portfolio.
In the current scenario, individuals hire well trained and experienced portfolio managers who as per the client’s risk taking capability combine various investment products and create a customized portfolio for guaranteed returns in the long run.
It is essential for every individual to save some part of his/her income and put into something which would benefit him in the future. A combination of various financial products where an individual invests his money is called a portfolio.
The art of changing the mix of securities in a portfolio is called as portfolio revision.
The process of addition of more assets in an existing portfolio or changing the ratio of funds invested is called as portfolio revision.
The sale and purchase of assets in an existing portfolio over a certain period of time to maximize returns and minimize risk is called as Portfolio revision.
There are two types of Portfolio Revision Strategies.
Active Revision Strategy involves frequent changes in an existing portfolio over a certain period of time for maximum returns and minimum risks.
Active Revision Strategy helps a portfolio manager to sell and purchase securities on a regular basis for portfolio revision.
Passive Revision Strategy involves rare changes in portfolio only under certain predetermined rules. These predefined rules are known as formula plans.
According to passive revision strategy a portfolio manager can bring changes in the portfolio as per the formula plans only.
Formula Plans are certain predefined rules and regulations deciding when and how much assets an individual can purchase or sell for portfolio revision. Securities can be purchased and sold only when there are changes or fluctuations in the financial market.
Aggressive Portfolio consists of funds that appreciate quickly and guarantee maximum returns to the investor.
Defensive portfolio consists of securities that do not fluctuate much and remain constant over a period of time.
Formula plans facilitate an investor to transfer funds from aggressive to defensive portfolio and vice a versa.
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