Asset Management: Building a Properly Integrated Investment Portfolio
Asset management refers to the management of the investment managers within a particular investment portfolio. Investment management refers to the management of the specific securities and other assets.
One of the primary determinants of portfolio performance is the asset allocation decision. How you design an asset allocation strategy and determine your specific asset allocation targets depends to a large extent on your risk profile. By analyzing your portfolio against target allocations, you can gauge where your portfolio may be over or underweighted.
You can create and implement the target allocations starting with cash or around your existing holdings or with the addition of actively managed mutual funds, index mutual funds and exchange traded funds. By analyzing your current mutual fund positions, you can adjust your allocations at the total market level or allocate to market capitalization and style and attempt to reduce style overlap.
After you build a properly integrated investment portfolio, you can evaluate the target allocation and related performance on a regular basis. This includes the tracking of your portfolio holdings, interest and dividend payments, capital gains, overall portfolio performance, and so forth.
As the markets shift and as your needs and goals change, you can reassess your risk profile to make sure that your portfolio is still appropriate for you.
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