Portfolios

A portfolio is a collection of assets or works assembled to achieve specific objectives. In finance, a portfolio refers to a grouping of investments intended to balance risk and return, whereas in education and the arts it refers to a curated display of work.

Investment portfolios typically include equities, bonds, cash equivalents, and sometimes alternatives. Portfolio construction relies on asset allocation and diversification to manage risk. Performance is evaluated using total return and risk-adjusted measures such as volatility and the Sharpe ratio, often against a benchmark index. Rebalancing adjusts holdings to maintain the target allocation.

Other uses: project portfolios in organizations manage a selection of programs and projects to align with strategic goals; academic portfolios collect evidence of learning; professional and art portfolios showcase skills and work history.

Development process: set objectives and constraints (time horizon, risk tolerance, liquidity); select assets or works; implement; monitor performance; adjust as needed; disclose relevant information to stakeholders, considering cost and taxes.

Theoretical frameworks such as modern portfolio theory assume investors seek to optimize the trade-off between expected return and risk, leading to the efficient frontier concept. Portfolio management also involves considerations of liquidity, fees, taxation, and regulatory requirements, depending on the type of portfolio and jurisdiction.