Managing portfolio: Crucial to focus on risk rather than returns

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SummaryAsset allocation is the process of deciding how to distribute an investor’s wealth among different asset classes.

of the monitoring process is to evaluate a portfolio’s performance and compare the relative results to expectations and requirements listed in the policy statement.

A carefully constructed policy statement determines the types of assets that should be included in a portfolio. The asset allocation decision determines most of the portfolio’s returns over a period of time. There are no guarantees to success, but maintaining a disciplined approach surely helps.

The writer is associate professor in finance & accounting in IIM Shillong

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