Policies and Resources

Portfolio Management 


Portfolio management refers to the process of developing, operating, maintaining, and marketing investments in a price-effective way. Typically employed in finance, the term is applied in reference to individuals or firms that manage these investments on behalf of individuals or other entities.  


Every firm needs to keep track of its investments. That way, its stakeholders will know which investments are available to be employed to provide maximum benefits. The investments owned by any organisation can be classed into two major categories: 

  • Non-current investments.  
  • Current investments. 

Non-current investments refer to the investments acquired for long-term application, while current investments are those that can be converted into cash in an instant. 

When it comes to portfolio management, managers often deal with two main concerns. The first is what role does the portfolio management process play? Second, how can a firm develop a good portfolio management plan? 

Value of Portfolio Management 

There are novel reasons why organisations should be concerned with regard to portfolio management, including: 

  1. Enables a firm to account for all its investments 

The process makes it easy for firms to keep track of their investments, whether in current or non-current. Firm owners will know where these investments are located, how they are being employed, and whether there have been changes made to them. Consequently, the recovery of investments can be done more efficiently, hence, leading to higher benefits. 

  1. Assists guarantee the accuracy of amortisation rates  

Since investments are checked on a regular basis, the process of portfolio management ensures that the financial statements record them properly.  

  1. Assists identify and manage risks 

Portfolio management encompasses the identification and management of risks that arise from the employment and ownership of certain investments. It implies that a firm will always be prepared to manage any risk that comes its way.  

  1. Removes ghost investments in the firm’s inventory 

Instances exist where misplaced, mishandled, or misappropriated investments are incorrectly recorded on the books. With a strategic portfolio management plan, the firm owner will be aware of the investments that have been misplaced, mishandled, or misappropriated, and remove them in the books.  

Developing a Strategic Portfolio Management Plan 

Investment ownership is part of any public or private enterprise. To manage the investments effectively, a firm owner needs to develop a strategic plan.  

  1. Complete a portfolio inventory 

Before anything else, an owner needs to take count of all the investments that he owns. When preparing an inventory of firm investments, the following should be included: 

  • Total count of investments 
  • Where the investments are 
  • The value of each investment 
  • When the investments were acquired 
  • The expected life cycles of the investments 
  1. Compute life-cycle valuation 

If a business owner wants his portfolio management plan to be precise, then he should calculate the entire life-cycle valuation of each investment.  

  1. Set levels of values 

After computing the life-cycle evaluation, the next step is to set levels of value. Put simply, it implies listing the overall quality, capacity, and role of the novel values that the investments provide. In doing so, a firm owner can then determine the operating, maintenance, and renewal activities needed to keep the investments in good condition. 

  1. Exercise long-term financial planning 

Ideally, the portfolio management process that a firm owner adapts should easily translate into long-term financial plans. With a good financial plan in place, the owner can then assess which objectives are feasible, and which ones need to be prioritised.  

Benefits of Portfolio Management 
  1. Improving acquisition and application 

By keeping tabs on a firm’s investments all through their lie cycle, a firm owner can improve their technique of acquiring and applying investments.  

  1. Improving compliance 

Government agencies, non-profit organisations, and firms are required to provide comprehensive reports on how they acquire, apply, and dispose of investments. To ease the reporting process, a majority of them record their portfolio information in a central database. In such a way, when they need to compile the reports, they can easily access all the information they need.  

Portfolio Management Career 

A portfolio manager oversees the management of investment portfolios for their employers. Employers include: 

  • Pension funds. 
  • Banks. 
  • Hedge funds. 
  • Wealth management firms. 
  • Insurance firms. 
  • Charities. 
  • Family offices. 

The portfolio manager is responsible for maintaining the proper asset mix and investment strategy that suits the employer’s needs. The personality of someone who would thrive in a portfolio management position likely has the following character traits: 

  • Cerebral. 
  • Detail oriented. 
  • Quantitative. 
  • Focused. 

In terms of progression, some people take on leadership or executive roles at the firm, or they start their own portfolio management firm.  


Portfolio management is simply a system that assists firms keep tabs on all their investments. Keeping tabs on the investments assists streamline operations. The process also lowers the chance of recording ghost investments since all the available investments are well accounted for.