DEFINITION OF PORTFOLIO MGT Portfolio is none other than Basket of Stocks.

Portfolio Management is the professional management of various securities (shares, bonds and other securities) and assets (e.g., real estate) in order to meet specified investment goals for the benefit of the investors. It may refer to:

Portfolio management is all about strengths, weaknesses, opportunities and threats in the choice of debt vs. equity, domestic vs. international, growth vs. safety, and many other tradeoffs encountered in the attempt to maximize return at a given appetite for risk.
Wealth mgt Wealth management is an investment advisory discipline that incorporates financial planning, investment portfolio management and a number of aggregated financial services. High Net worth Individuals(HNWIs), small business owners and families who desire the assistance of a credentialed financial advisory specialist call upon wealth managers to coordinate retail banking, estate planning, legal resources, tax professionals and investment management. Wealth managers can be an independent Certified Financial Planner, MBAs, Chartered Strategic Wealth Professional,
[1]

CFA Charterholders or any credentialed professional money manager who works to

enhance the income, growth and tax favored treatment of long-term investors. Wealth management is often referred to as a high-level form of private banking for the especially affluent. One must already have accumulated a significant amount of wealth for wealth management strategies to be effective. Financial planning In general usage, a financial plan is a series of steps or goals used by an individual or business, the progressive and cumulative attainment of which are designed to accomplish a final financial goal or set of circumstances, e.g. elimination of debt, retirement preparedness, etc. This often includes a budget which organizes an individual's finances and sometimes includes a series of steps or specific goals for spending and saving future income. This plan allocates future income to various types of expenses, such as rent or utilities, and also reserves some income for short-term and longterm savings. A financial plan sometimes refers to an investmentplan, which allocates savings to various assets or projects expected to produce future income, such as a new business or product line, shares in an existing business, or real estate. PORTFOLIO The term portfolio refers to any collection of financial assets such as stocks, bonds, and cash. Portfolios may be held by individual investors and/or managed by financial professionals, hedge funds, banks and other financial institutions. It is a generally accepted principle that a portfolio is designed according to the investor's risk tolerance, time frame and investment objectives. The monetary value of each asset may influence the risk/reward ratio of the portfolio and is referred to [2] as the asset allocation of the portfolio. When determining a proper asset allocation one aims at maximizing the expected return and minimizing the risk. This is an example of a multi-objective optimization problem

Asset allocation Benifit

Many financial experts say that asset allocation is an important factor in determining returns for an [1] investment portfolio. Asset allocation is based on the principle that different assets perform differently in different market and economic conditions. A fundamental justification for asset allocation is the notion that different asset classes offer returns that are not perfectly correlated, hence diversification reduces the overall risk in terms of the variability of returns for a given level of expected return. Asset diversification has been described as "the only free lunch you will find in the investment gam Diversification In finance, diversification means reducing risk by investing in a variety of assets. If the asset values do not move up and down in perfect synchrony, a diversified portfolio will have less risk than the weighted average risk of its constituent assets, and often less risk than the least risky of its [1] constituents. Therefore, any risk-averse investor will diversify to at least some extent, with more riskaverse investors diversifying more completely than less risk-averse investors.

Multi-objective optimization
From Wikipedia, the free encyclopedia

Plot of objectives when maximizing return and minimizing risk in financial portfolios (Pareto-optimal points in red)

Multi-objective optimization (or multi-objective programming or "pareto optimization"),[1][2] also known as multi-criteria or multi-attribute optimization, is the process of simultaneously optimizing two or more conflicting objectives subject to certain constraints. Multiobjective optimization problems can be found in various fields: product and process design, finance, aircraft design, the oil and gas industry, automobile design, or wherever optimal decisions need to be taken in the presence of trade-offs between two or more conflicting objectives. Maximizing profit and minimizing the cost of a product; maximizing performance and minimizing fuel consumption of a vehicle; and minimizing weight while maximizing the strength of a particular component are examples of multi-objective optimization problems. For nontrivial multiobjective problems, one cannot identify a single solution that simultaneously optimizes each objective. While searching for solutions, one reaches points such that, when attempting to improve an objective further, other objectives suffer as a result. A tentative solution is called non-dominated, Pareto optimal, or Pareto efficientif it cannot be eliminated from consideration by replacing it with another solution which improves an objective without worsening another one. Finding such non-dominated solutions, and quantifying the trade-offs in satisfying the different objectives, is the goal when setting up and solving a multiobjective optimization problem

Solution methods
Constructing a single aggregate objective function (AOF) Evolutionary algorithms

Key diFFERENCE between Portfolio Management and Wealth Management Portfolio management is an ingredient among the set of services offered beneath wealth management. Wealth management services are targeted at high net worth individuals, business establishments and services to shield and raise their wealth whereas Portfolio management deals with generating, managing and estimating the performance of a depositors investment portfolio. Wealth management is concerned with investment advisory restraint that integrates pecuniary planning, investment portfolio management and a range of cumulative financial services. Wealth managers are concerned with a company as a whole whereas portfolio managers need to assess an individuals related affairs.

7 of 15 Client Profiling and assessment of investment objectives Defining portfolio management strategies Portfolio modeling, determination of the constituents and allocation of assets Managing transaction processes, benefit processing, Tax management, Accounting, Reconciliation, Client Reporting, Fee/charges etc. Implementation, Churning, Rebalancing and divestment of assets Investment Performance - Return (absolute/trend) - Tax impact - Transaction costs Financial Planning Portfolio Strategy and Modeling Strategy Impln. and Review

Portfolio Mgmt/Admin

Wealth Management Overview Client Profiling and assessment of investment objectives Defining portfolio management strategies Portfolio modeling, determination of the constituents and

allocation of assets Managing transaction processes, benefit processing, Tax management, Accounting, Reconciliation, Client Reporting, Fee/charges etc. Implementation, Churning, Rebalancing and divestment of assets Investment Performance - Return (absolute/trend) - Tax impact - Transaction costs Financial Planning Portfolio Strategy and Modeling Strategy Impln. and Review

Portfolio Mgmt/Admin Wealth Management Overview 3.1 Financial Planning 3.1.1. Client Profiling Client profiling takes in account multitude of behavioural, demographic and investment characteristics of a client that would determine each clients wealth management requirements. Some of key characteristics to be evaluated for defining clients investment objective are: - Current and future Income level - Family and life events - Risk appetite / tolerance - Taxability status - Investment horizon - Asset Preference /restriction - Cash flow expectations - Religious belief (non investment in sin sector like - alcohol, tobacco, gambling firms, or compliant with Sharia laws) - Behavioural History (Pattern of past investment decisions) - Level of clients engagement in investment management (active / passive)

- Present investment holding and asset mix 3.1.2. Investment Objective Based on the client profile, investment expectations and financial goals of the client could be clearly outlined. Defining investment objectives helps to identify investment options to be considered for evaluation. Investment objective for most of the investors could be generally considered amongst the following:

MUTUAL FUNDS
A mutual fund is a type of professionally-managed collective investment vehicle that pools money from many investors to purchase securities.[1] While there is no legal definition of mutual fund, the term is most commonly applied only to those collective investment vehicles that are regulated, available to the general public and open-ended in nature. Hedge funds are not considered a type of mutual fund.

Types
The Investment Company Act of 1940 established three types of registered investment companies or RICs in the United States: open-end funds, unit investment trusts (UITs); and closed-end funds. Exchange-traded funds (ETFs) are open-end funds or unit investment trusts that trade on an exchange; they have gained in popularity recently. While the term "mutual fund" may refer to all three types of registered investment companies, it is more commonly used to refer exclusively to the open-end type.
[edit] Open-end funds Main article: Open-end fund

Open-end mutual funds must be willing to buy back their shares from their investors at the end of every business day at the net asset value computed that day. Most open-end funds also sell shares to the public every business day; these shares are also priced at net asset value. A professional investment manager oversees the portfolio, buying and selling securities as appropriate. The total investment in the fund will vary based on share purchases, share redemptions and fluctuation in market valuation. There is no legal limit on the number of shares that can be issued.

Open-end funds are the most common type of mutual fund. At the end of 2011, there were 7,581 open-end mutual funds in the United States with combined assets of $11.6 trillion.[13]
[edit] Closed-end funds Main article: Closed-end fund

Closed-end funds generally issue shares to the public only once, when they are created through an initial public offering. Their shares are then listed for trading on a stock exchange. Investors who no longer wish to invest in the fund cannot sell their shares back to the fund (as they can with an open-end fund). Instead, they must sell their shares to another investor in the market; the price they receive may be significantly different from net asset value. It may be at a "premium" to net asset value (meaning that it is higher than net asset value) or, more commonly, at a "discount" to net asset value (meaning that it is lower than net asset value). A professional investment manager oversees the portfolio, buying and selling securities as appropriate. Closed-end funds have been declining in popularity. At the end of 2010, there were 624 closed-end funds in the United States with combined assets of $241 billion.[13] Fixed incomes provider securities

Bonds

Bonds are debt securities. An investor lends money to an entity (government or corporation) and receives a coupon (interest rate), which will be paid throughout the maturity date. Once the bond matures the bond's principal will be paid in full. There are two types of government bonds. Treasury bonds are issued by the United State government; and municipal bonds are issued by a state or local government. These bonds are considered safe due to the unlikelihood of the government defaulting on the bond. Corporate bonds are issued by companies. Corporations with solid financial standing and clean balance sheets are lower-risk then debt-laden corporations. Government bond maturities range from 5 to 30 years, while municipal and corporate bonds range from 3 to 10 years in length. An investor can even gain exposure to international and emerging markets through bonds. Municipal bonds may be tax-exempt at the local, state or federal level.

Municipal Notes and Treasury Bills

Municipal notes are issued by local and state governments, much like a municipal bond. However, these municipal notes mature in less than one year. Treasury bills are issued by the United States government--like municipal notes--mature in less than one year. Both securities offer fixed income to the municipal-note and T-bill holder. However, these fixed-income securities are favorable due to the short maturity period. Municipal notes may be tax-exempt at the local, state or federal level, too.

Preferred Stock

Stocks are more volatile then bonds. However, preferred shares are less volatile then common shares. Preferred stock are considered a fixed-income security due to the fixed dividend, which does not fluctuate like the dividend of a common stock. Preferred shareholders receive priority over a company's assets in the event of bankruptcy (after creditors are paid). The biggest benefit of preferred shares is that they can act as both fixed income (fixed dividend) and equity (capital appreciation). The preferred stock has a chance to increase in value, allowing the investor to sell shares and make a profit.

Many others are Commercial bill, FD, Certificate of deposit, RD Etc.