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2 It involves changing existing mix of securities. This
can be done by changing the securities currently
included in portfolio or by
altering the proportion of funds invested in
securities.

2 It leads to purchases & sales of securities

2 Objective of portfolio revision is to maximizing the

return for a given level of risk or minimization the risk
for the given level of return
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2vailability of additional funds for investments

2Change in risk tolerance
2Change in investment goals
2Need to liquidate a part of the portfolio to
provide funds for some alternative use
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2 Transaction Cost
2 Taxes
2 Statutory Stipulation
2 Intrinsic Difficulty
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2 ctive Revision Strategy

2 Passive Revision Strategy

     
2 It is one in which the composition of
the portfolio is dynamic
Ú The portfolio manager periodically
changes:
2 The portfolio components or
2 The components¶ proportion within the
portfolio
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2 It is a process of holding a well

diversified portfolio for a long term
with buy and hold approach. It refers
to the investors attempt to construct
a portfolio that resembles the overall
market returns.
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2 It consists of predetermined rules regarding

when to buy or sell & how much to buy or
sell. These predetermined rules call for
specified actions when there are changes in
the securities market.

2 Investment funds
i). ggressive (Equity shares)
ii). Conservative or defensive (bonds &
debentures).


 

2 Investor fund allocated to Fixed

Income securities and Common Stocks
2 PF ± ggressive in Low Market &
Defensive when market is rising
2 Stocks are bought and sold ± change in
Prices
2 Follow one formula which he chosen
2 Select the good stocks
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2 Rupee Cost veraging Plan

2 Constant Rupee Plan
2 Constant Ratio Plan
2 Variable Ratio Plan
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2  Passive long term strategy´

2 The investor should select regular

commitment of buying shares ate
regular intervals.
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2 Two Portfolios ± ggressive &

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2 It enables the shift of investment

from bonds to stocks and vice-versa
by maintaining a constant amount
invested in the stock portion of
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2 It attempts to maintain a constant

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the Investor.

2 ttitude towards Risk

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2 t various levels of market price, the

proportions of the stocks and bonds
change. Whenever the price of the
stock increases, the stocks are sold
and new ratio is adopted by
increasing the proportion of defensive
or conservative portfolio.

2 Long term trend estimation

 
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2 Trading fees
2 Market impact
2 Management time
2 Tax implications
2 Window dressing

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2 Commissions
2 Transfer taxes

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2 The ’
’  of placing the

trade is the change in market price
purely because of executing the trade

2 Market impact is a real cost of trading

2 Market impact is especially

pronounced for shares with modest
daily trading volume

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2 Most portfolio managers handle more

than one account

2 Rebalancing several dozen portfolios

is time consuming

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2 Individual investors and corporate

clients must pay taxes on the realized
capital gains associated with the sale
of a security

2 Tax implications are usually not a

concern for tax-exempt organizations

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2 ü


   refers to cosmetic
changes made to a portfolio near the
end of a reporting period

2 Portfolio managers may sell losing

stocks at the end of the period to
avoid showing them on their fund
balance sheets

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