Portfolio Management Glossary
Portfolio Management Glossary
Essential terms and definitions for understanding the portfolio management industry and wealth management concepts.
AUM (Assets Under Management)
The total market value of all assets that an investment manager, financial institution, or portfolio management system oversees on behalf of clients. AUM is a key metric used to measure the size and s...
Learn More →Portfolio Management
The art and science of making investment decisions and managing a collection of investments to meet specific financial objectives. Portfolio management involves asset allocation, security selection, r...
Learn More →Asset Allocation
The strategic distribution of investment capital across different asset classes (such as stocks, bonds, real estate, and alternatives) to optimize the risk-return profile of a portfolio based on inves...
Learn More →Performance Attribution
An analytical technique used to identify and quantify the sources of portfolio returns by breaking down performance into components such as asset allocation decisions, security selection, and market t...
Learn More →Risk Management
The process of identifying, assessing, and controlling potential losses in investment portfolios through various techniques including diversification, hedging, position sizing, and risk monitoring to ...
Learn More →Benchmark
A standard or reference point used to measure and compare the performance of an investment portfolio. Common benchmarks include market indices like the S&P 500 for equity portfolios or custom benchmar...
Learn More →Portfolio Rebalancing
The process of realigning the weightings of assets in a portfolio by buying or selling assets to maintain desired asset allocation targets. Rebalancing helps maintain risk levels and can be triggered ...
Learn More →Alpha
A measure of investment performance that indicates how much a portfolio has outperformed or underperformed a benchmark index on a risk-adjusted basis. Positive alpha suggests outperformance, while neg...
Learn More →Beta
A measure of an investment's volatility relative to the overall market or a benchmark index. A beta of 1 indicates the investment moves with the market, while beta greater than 1 suggests higher volat...
Learn More →Sharpe Ratio
A risk-adjusted performance measure that calculates the excess return of a portfolio over a risk-free rate divided by the portfolio's standard deviation. Higher Sharpe ratios indicate better risk-adju...
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