What are the most popular portfolio types?
Portfolio management is the science of taking decisions about investment mix and policy. Also making sure their investments match their objectives, and proper asset location for individuals and institutions, and balancing their risk. An effective portfolio management is the long-term mix of asset. Investors with more aggressive profile can weight their portfolio toward more volatile investments. Where as investors with a more conservative profile can weight their portfolio toward more stable investments.
These are most popular portfolio types :
An aggressive portfolio is a portfolio where the stocks are with a high-risk or a high-reward proposition. Stocks in this category basically have a high beta, or sensitivity to the overall market. Higher beta stocks mostly experience larger fluctuations compared to the overall market. If the individual stock has a beta of 2.0. It generally moves twice as much as the overall market in either direction.
An income portfolio has a focus on making money through dividends or other types of distributions to stakeholders. These companies are mostly like the safe defensive stocks but they should offer higher yields. An income portfolio should generate positive cash flow. Real estate investment trusts and master limited partnerships are the best sources of income-producing investments. However, these stocks are also subjected to the economic climate.
A speculative portfolio presents highest risk than any others portfolio. Speculative plays could be initial public offerings (IPOs). It can also be stocks that can be takeover rumor targets. Technology or health care firms who are in the process of researching a breakthrough product, or a junior oil company which is about to release its initial production results would also include into this category.
An investment portfolio is a collection of assets owned by an individual or by an institution. An investor’s portfolio includes real estate and so-called “hard” assets, such as gold bars. The most investment portfolios, are generated to pay for a retirement. It generally includes securities, such as stocks, bonds, mutual funds, money market funds and exchange traded funds. The best retirement portfolios diversify the mix of investments. It can range from the caution of US Treasury bonds to the risky zip of small-company stocks. Further in an effort to recover market losses and maximize potential gains.
A hybrid portfolio management strategy is when you allocate a percentage of your portfolio to passive investments. Further you can keep a percentage to active investments.The advantages of the hybrid strategy are that it combines the benefits of the two individual approaches. While it also mitigating some of their respective drawbacks.