A collection of various stocks, shares, bonds, etc., held by persons or institutions investing money on behalf of others. They may be unit trust managers, investment companies or merely personal trustees. The spread of the investments contained in any particular portfolio will usually be determined by the deed or instrument appointing the managers or trustees or, in the latter instance, by trust law. The principal aim is to maximize the income of the fund on which the portfolio is based or its capital value whilst at the same time preserving the initial value and attempting to increase it as far as possible without taking undue risks. Portfolio investment is the ideal form of group investment, because it enables investment to be spread over a number of different areas of risk. thereby hedging possible losses; it also means that money can be frequently switched to take advantage of any profitable investment opportunity that arises in the short term. These advantages make it a good basis not only for unit trusts and institutional investors but also for humbler investment clubs.
Reference: The Penguin Business Dictionary, 3rd edt.
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