A STUDY ON MUTUAL FUND WAY TO ENHANCE PORTFOLIO MANAGEMENT

A Portfolio is a collection of investment instruments such as stocks, shares, mutual funds, bonds, deposits, cash, etc. depending on individual investor's income, budget and his / her investment time horizon. Management is the organization and coordination of activities of a company in accordance with certain well-defined policies and predefined objectives. Portfolio Management (PM) helps the investor in choosing the securities that provide a reasonable return for any given degree of risk. It is the art of choosing an appropriate investment policy with minimum risk and maximum return. Need for Portfolio Management Portfolio management provides an ideal investment plan depending on the individual's income, budget, age and ability to take risks. It reduces the risk element and increases the return margin. Portfolio manager is an individual who understands the client's financial needs and suggests a suitable investment plan in line with his income and risk profile i.e., customized investment plan. Types and Objectives of Portfolio Management Portfolio Management is of four types and they are: Active portfolio management, Passive portfolio management, Discretionary portfolio management and Non-discretionary portfolio management. The means to effective portfolio management is to be disciplined in investing. The objectives of portfolio management are applicable to all financial portfolios and results in a proper analytical approach towards the growth of the portfolio. The overall risk needs to be maintained at an acceptable level by maintaining a balanced portfolio. Finally, a good portfolio of growth stocks often satisfies all objectives of portfolio management. The reasons to manage portfolio wisely are: (i) safety of principal, (ii) consistent and regular returns, (iii) capital appreciation, (iv) easy marketability and tradability, (v) liquidity, (vi) diversified portfolio and (vii) positive tax status.