Before knowing the Types of portfolio management, it is important to know what portfolio management is.
So let's start.
Although portfolio management strategies have changed, they generally fall into four categories:-
- Active portfolio management
- Passive portfolio management
- Discreet portfolio management
- Non-Discreet portfolio management
Types of Portfolio Management
Active portfolio management
The goal of an active portfolio manager is to get better returns than the market suggests. Those who follow this investment method are usually against their policy. Active managers buy shares when they are cheap and start selling when they rise above the norm.
Active portfolio management involves a quantitative analysis of a company to determine its value relative to the potential of the stock. To do this, the active manager avoids an effective market concept and instead relies on the ratio to support his claim.
To reduce risk, the Active Manager seeks to expand investments in a variety of sectors. The problem with active portfolio management is that it all comes down to the manager's expertise. If you find someone who has the necessary knowledge of how the method of investing value will give good dividends.
Passive portfolio management
The passive investment strategy comes at the opposite end of active management. Subscribers to this theory believe in effective market hypotheses. The basics of a company are always reflected in the stock price. Therefore, a passive manager prefers low-turnover but prefers good long-term index funds.
With index funds, you reinvest one per cent of your money in proportion to your market capitalization. That is if a company represents 2% in the 500 indexes, Rs. The company will invest Rs 2 per Rs 100 in 500 funds.
The option of low yield is to face the cost of maintenance fee, while at the same time profiting through stability.
Discreet portfolio management
The investor gives full discretion to the discretionary to make the decision. When it comes to personal goals and timeliness, the manager adopts a strategy that he thinks is best.
After handing over the money to a professional, the investor sits down and believes the profit will increase.
Non-Discreet portfolio management
Non-Discreet Manager Financial Advisor. Advises the investor which ways are best. Although the pros and cons are clearly stated, the investor must choose their own path. Only when the manager moves forward does he make a move on behalf of the investor.
If you decide to use Portfolio Manager or take on that role yourself, it is important to choose a practical strategy and make sure it is put forward rationally. The benefit of maintaining a prudent portfolio is that it reduces confusion when making the right investment for individual goals.