MONITORING

AND REVISION
OF PORTFOLIO
Prepared by:
Marienne Joy D. Galimba
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PORTFOLIO
A combination of various
investment products like bonds,
shares, securities, mutual funds,
etc.
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WHAT IS PORTFOLIO
REVISION?
» Portfolio revision is the process of selling certain
issues in portfolio and purchasing new ones to
replace them.
» The process of addition of more assets in an
existing portfolio or changing the ratio of funds
invested.
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NEED FOR PORTFOLIO

REVISION
» An individual at certain point of time might feel the
need to invest more.
» Change in investment goal also gives rise to
revision in portfolio.
» Financial market is subject to risks and
uncertainty.
» As the economy evolves, certain industries and
companies become either less or more attractive
as investments.
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PORTFOLIO REVISION
STRATEGIES
Active Revision Strategy Passive Revision
involves frequent Strategy
changes in an existing involves rare changes in
portfolio over a certain portfolio only under
period of time for certain predetermined
maximum returns and rules. These predefined
minimum risks. rules are known as
formula plans.
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WHAT ARE FORMULA PLANS?

Formula Plans are certain predefined rules and regulations deciding
when and how much assets an individual can purchase or sell for
portfolio revision.

WHY FORMULA PLANS?

Formula plans help an investor to make the best possible use of
fluctuations in the financial market. One can purchase shares when the
prices are less and sell off when market prices are higher.
With the help of Formula plans an investor can divide his funds into
aggressive and defensive portfolio and easily transfer funds from one
portfolio to other.
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PORTFOLIO MONITORING
Three areas to monitor:
» Changes in market conditions
» Changes in investor’s circumstances
- wealth, time horizon, liquidity requirements, tax
circumstances, legal considerations, other
circumstances and investor’s needs.
» Asset mix in the portfolio
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REBALANCING A PORTFOLIO
» Rebalancing portfolio is the process of periodically
adjusting it to maintain certain original conditions.
» A rebalanced portfolio is less volatile than one that is not
rebalanced.
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METHODS OF REBALANCING A
PORTFOLIO
» Constant Proportion Portfolio
- adjustments are made so as to maintain the relative
weighting of the portfolio components as their prices
change.
» Constant Beta Portfolio
- the base for the rebalancing portfolio using this
alternative is the target portfolio Beta.
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METHODS OF REBALANCING A
PORTFOLIO
» Indexing
- more frequently used by institutional investors
(often mutual funds), because their portfolios tend
to be large and the strategy of matching a market
index are best applicable for them
- managing index based portfolio investor
eliminates concern about outperforming the
market, because by design, it seeks to behave just
like the market averages.
 THANK YOU 11

FOR
LISTENING!
References:
https://www.managementstudyguide.com/portfolio-
revision
https://www.scribd.com/document/307465730/
Portfolio-Evaluation-and-Revision