Edge-ucation / Investing Coaching

Types of Portfolio Management

  • Austin Still

    Austin holds a Bachelor of Commerce from the University of Saskatchewan and brings over 10 years of investing experience. With a belief the most important decision investors make when buying stocks is the price paid, Austin aims to blend growth with value by finding companies with accelerating growth combined with a discounted valuation. More specifically, Austin’s expertise lies in the technology sector, identifying businesses showing strong growth, a lasting competitive advantage, and sound fundamentals, paired with a valuation that supports further stock price appreciation.

    View all posts

Savvy investors are always seeking to optimize their returns while safeguarding their assets.

Enter portfolio management, an artful blend of science and strategy that empowers individuals and institutions alike to navigate the complexities of investing. A well-managed portfolio is akin to a carefully crafted masterpiece, balancing risk and reward, diversifying assets, and aligning with unique financial goals.

In this article, we will focus on everything portfolio management, uncovering the various types, strategies, and methodologies. From time-tested traditional approaches to cutting-edge modern techniques, we explore the diverse strategies employed by investors to maximize profits, mitigate risks, and maintain long-term financial prosperity.

What is Portfolio Management?

At its core, portfolio management is a dynamic discipline that involves the careful selection, monitoring, and optimization of various financial assets to achieve specific investment objectives. The term “portfolio” refers to a collection of investments, such as stocks, bonds, mutual funds, real estate, or other financial instruments, held by an individual or an entity.

The fundamental goal of portfolio management is to strike a delicate balance between risk and return, tailored to the unique preferences and risk tolerance of the investor. By diversifying investments across different asset classes, industries, and geographic regions, portfolio managers aim to spread risk and potentially enhance returns over time.

Key Components of Portfolio Management:

While the intent of portfolio management is simple, there are many components investors and portfolio managers must take into consideration when making decisions.

Here are some of the most important aspects of portfolio management investors should make sure to understand:

Asset Allocation:

One of the cornerstones of portfolio management is asset allocation. This process involves determining the ideal mix of assets to be held within the portfolio. Investors allocate their resources across various classes, such as equities, fixed-income securities, cash, and alternative investments, depending on their financial goals, time horizon, and risk appetite.

Risk Management:

Effective portfolio management entails a robust risk management strategy. Investors need to identify and evaluate potential risks associated with their investments, including market volatility, economic downturns, geopolitical factors, and company-specific risks. Mitigating these risks can help protect the portfolio from severe losses during turbulent times.


The adage “don’t put all your eggs in one basket” holds true in portfolio management. Diversification is the practice of spreading investments across different assets and industries to reduce exposure to any single investment’s fluctuations. This diversification helps create a more stable and resilient portfolio, as different assets may respond differently to market conditions.

Performance Evaluation:

Regularly monitoring and assessing the performance of a portfolio is crucial for success. Portfolio managers analyze returns, risk-adjusted metrics, and other key performance indicators to ensure the investments remain aligned with the investor’s goals and to identify areas for improvement.


Over time, the market’s fluctuations can cause the portfolio’s asset allocation to deviate from the original plan. Rebalancing involves readjusting the portfolio periodically to maintain the desired asset allocation. This ensures that the portfolio remains in line with the investor’s risk profile and long-term objectives.

Overall, portfolio management is a dynamic and iterative process, adapting to changing market conditions and the investor’s evolving financial situation. It demands a deep understanding of financial markets, macroeconomic factors, and an ability to navigate uncertainty with prudence and foresight.

Most Common Types of Portfolio Management Strategies

In the vast landscape of portfolio management, various strategies have emerged over the years, each designed to cater to different risk appetites, investment horizons, and financial objectives.

Understanding these diverse approaches can empower investors to make better decisions and select the most suitable strategy that aligns with their individual preferences. Let’s explore some of the most common types of discretionary portfolio management strategies:

Passive Portfolio Management

Office Relax Images - Free Download on Freepik | Freepik

Office Relax Images – Free Download on Freepik | Freepik

A passive portfolio management strategy, also known as passive investing or index investing, involves creating a portfolio that replicates a market index, such as the S&P 500. The goal is not to outperform the market but to match its performance. Passive strategies are characterized by low turnover and fees, making them an attractive choice for investors seeking steady, long-term growth without actively managing their investments.

Active Portfolio Management

2022 RIA Study: RIAs Favor Active Portfolio Management Styles

2022 RIA Study: RIAs Favor Active Portfolio Management Styles | Ria in a box

In contrast to passive strategies, active investment management involves a hands-on approach, where portfolio managers (through non discretionary portfolio management) and individual investors actively make decisions to outperform the market. They conduct in-depth research, analyze financial data, and continually adjust the portfolio’s holdings to capitalize on market opportunities. Active management aims to generate alpha, which represents returns above a benchmark index.

Growth Portfolio Management

Growth-oriented portfolios focus on investing in assets with substantial potential for capital appreciation. These investments are typically associated with companies or sectors expected to experience above-average growth rates. Growth portfolio managers prioritize companies with strong earnings growth and high potential for future expansion, albeit with higher volatility and risk.

Value Portfolio Management

Value investing involves selecting assets that the market undervalues relative to their intrinsic worth. Portfolio managers seek out stocks or other investments trading below their perceived fair value, often with attractive dividend yields. Value investing emphasizes patience and a contrarian approach, seeking to benefit when the market eventually recognizes the asset’s true value.

Income Portfolio Management

Income-focused portfolios aim to generate a regular stream of income for investors, making them popular among those seeking consistent cash flows. Income portfolio managers typically invest in dividend-paying stocks, bonds, real estate investment trusts (REITs), and other income-generating assets.

Risk-Adjusted Portfolio Management

This strategy centers on optimizing risk-adjusted returns, considering both risk and reward. Portfolio managers assess the level of risk an investor is willing to bear and construct a portfolio that seeks to achieve the best possible returns within those risk parameters. Modern portfolio theory and various quantitative models play a significant role in this approach.

Tactical Asset Allocation

Investment Risk 101: Everything You Need to Know Before investing

What’s the Difference Between Strategic and Tactical Asset Allocation? | Money USnews

Tactical asset allocation involves dynamically adjusting the portfolio’s asset allocation based on short to medium-term market outlooks. Portfolio managers actively shift investments between different asset classes in response to changing market conditions and economic trends.

Strategic Asset Allocation

Strategic asset allocation, on the other hand, follows a predetermined, long-term investment plan that remains relatively stable over time. The allocation is based on an investor’s financial goals, risk tolerance, and investment horizon, with periodic rebalancing to maintain the desired asset mix.

These are just a few examples of the numerous portfolio management strategies available to investors. Each strategy comes with its unique advantages and challenges, and the most suitable approach will depend on an individual’s financial goals, risk tolerance, and investment philosophy. As you go deeper into the world of portfolio management, consider how these strategies can be tailored to your specific needs, helping you navigate the complexities of the financial markets and ultimately achieve your financial aspirations.

Should You Hire an Investment Portfolio Manager?

As investors seek to navigate the complexities of financial markets and achieve their investment goals, a crucial question often arises: should they hire an investment portfolio manager to handle their assets? This decision hinges on various factors, including the investor’s financial knowledge, time availability, risk tolerance, and long-term objectives.

Benefits of Hiring an Investment Portfolio Manager:

  • Expertise and Experience: Portfolio managers are financial professionals with in-depth knowledge of markets, asset classes, and investment strategies. Their expertise can prove invaluable in crafting a well-structured and diversified portfolio aligned with your specific financial goals.
  • Time Savings: Managing a portfolio can be time-consuming, requiring extensive research, analysis, and continuous monitoring. By delegating these responsibilities to a portfolio manager, investors can focus on other priorities in their personal and professional lives.
  • Risk Management: Experienced portfolio managers are skilled in assessing and mitigating risks associated with investments. They can implement strategies to safeguard your portfolio against potential downturns, offering a degree of risk management expertise that individual investors may lack.
  • Emotional Discipline: During market fluctuations and volatile times, investors may make emotionally-driven decisions that can negatively impact their portfolios. Portfolio managers, with a more objective perspective, can help maintain discipline and adhere to the long-term investment strategy.
  • Access to Institutional Investments: Some portfolio managers have access to exclusive investment opportunities, such as hedge funds and private equity, which may not be readily available to individual investors.

Considerations Before Hiring an Investment Portfolio Manager:

  • Fees and Expenses: Portfolio managers typically charge fees based on a percentage of assets under management. Investors should carefully evaluate these costs and consider whether the potential benefits outweigh the expenses.
  • Performance Track Record: Assess the portfolio manager’s historical performance and track record. Past performance does not guarantee future results, but it can provide insights into their investment approach and decision-making.
  • Alignment of Objectives: Ensure that the portfolio manager’s investment philosophy and strategy align with your financial objectives and risk tolerance. Effective communication and a clear understanding of your goals are essential in establishing a successful partnership.
  • Level of Involvement: Determine how involved you wish to be in the decision-making process. Some investors prefer a hands-on approach, while others entrust the portfolio manager with more autonomy.
  • Accountability and Transparency: Seek transparency in the manager’s investment decisions, portfolio holdings, and reporting. Regular updates and communication can provide peace of mind and confidence in the manager’s actions.

Ultimately, the decision to hire an investment portfolio manager is a personal one that depends on your financial circumstances, preferences, and level of comfort with investment decisions. Some investors may find value in the expertise and services provided by professional portfolio managers, while others may prefer to manage their portfolios independently.

Regardless of your choice, understanding the principles of portfolio management and the factors influencing investment decisions will empower you to make more confident decisions, nurture your financial growth, and work towards realizing your long-term financial aspirations.


Investment Risk 101: Everything You Need to Know Before investing

Investment Risk 101: Everything You Need to Know Before investing | Investor Junkie

Portfolio management stands as an essential pillar of modern finance, offering investors a strategic and methodical approach to navigating the ever-changing landscape of investment opportunities. Throughout this exploration of various portfolio management strategies, it becomes evident that no one-size-fits-all solution exists. Each investor’s financial goals, risk tolerance, and investment horizon play a pivotal role in shaping the most suitable approach.

From the passive nature of index investing to the active pursuit of alpha through strategic decision-making, the array of strategies at our disposal reflects the diversity of financial aspirations. Whether you’re seeking long-term growth, stable income, or balanced risk, portfolio management offers a multifaceted toolbox to tailor an investment journey to individual preferences.

As you move forward in your financial pursuits, remember that knowledge is a formidable ally. Stay on top of the latest market trends, economic developments, and technological advancements, as the financial landscape is constantly evolving. Continuous learning and decision-making can elevate your portfolio’s performance and safeguard your wealth from unforeseen challenges.

Whether you choose to manage your portfolio independently or enlist the expertise of a seasoned professional, always remain vigilant, disciplined, and aligned with your long-term objectives. Regularly assess your portfolio’s performance, periodically rebalance as needed, and maintain a proactive outlook toward financial markets.

With the right blend of knowledge, strategy, and perseverance, you can find success on your path toward financial prosperity, steadily building your wealth and working towards a future of financial security. Remember, the journey of investment portfolio management is not merely about reaching a destination but about mastering the art of making successful decisions and steering your financial destiny with confidence.



We are not brokers, investment, or financial advisers; you should not rely on the information herein as investment advice. If you are seeking personalized investment advice, please contact a qualified and registered broker, investment adviser, or financial adviser. You should not make any investment decisions based on our communications. Our stock profiles are intended to highlight certain companies for YOUR further investigation; they are NOT recommendations. The securities issued by the companies we profile should be considered high risk and, if you do invest, you may lose your entire investment. Edge Investments and its owners currently hold shares in Braxia stock and are compensated by Braxia for Investor Relations Services. Edge Investments and its owners reserve the right to buy and sell shares in Braxia without further notice, which may impact the share price. Please do your own research before investing, including reading the companies’ public filings, press releases, and risk disclosures. The company provided information in this profile, extracted from public filings, company websites, and other publicly available sources. We believe the sources and information are accurate and reliable but we cannot guarantee it. The commentary and opinions in this article are our own, so please do your own research.


Copyright ©️ 2023 Edge Investments, All rights reserved.

  • Austin Still

    Austin holds a Bachelor of Commerce from the University of Saskatchewan and brings over 10 years of investing experience. With a belief the most important decision investors make when buying stocks is the price paid, Austin aims to blend growth with value by finding companies with accelerating growth combined with a discounted valuation. More specifically, Austin’s expertise lies in the technology sector, identifying businesses showing strong growth, a lasting competitive advantage, and sound fundamentals, paired with a valuation that supports further stock price appreciation.

    View all posts

Leave a Comment

Get 30+ hours of analyst research directly in your inbox weekly. Sign-up today to stay on top of the market.