Business Glossary

combining securities to reduce risk by diversification. An example of a portfolio is a mutual fund. This is a popular investment vehicle consisting of a variety of securities or assets that are professionally managed. A major advantage of investing in mutual funds is diversification. Investors can own a variety of securities with a minimal capital investment. Since mutual funds are professionally managed, they tend to involve less risk. To reduce risk, securities in a portfolio should have negative or no correlation to each other.

combined holding of more than one stock, bond, commodity, real estate investment, cash equivalent , or other asset by an individual or institutional investor. The purpose of a portfolio is to reduce risk by diversification.

group of loans or assets, classified by type of borrower or asset under management. For example, the loan portfolio, the investment securities portfolio, or assets managed by a bank trust department. The largest asset portfolio in a commercial bank normally is the loan portfolio, in which loans are classified by borrower-commercial loan, mortgage loan, and consumer installment loan.

insurance company's total investments in financial securities.

1. group of securities held by an individual or institutional investor, which may contain a variety of common and preferred stocks, corporate and municipal bonds, certificates of deposit, and Treasury bills, that is, appropriate selections from the equity, capital, and money markets. The purpose of a portfolio is to reduce risk by diversification.
2. case or folder carried by artists to show their best works.

a group of investment assets.

Example: The real estate portfolio of a major insurance company is composed of six regional malls, four hotels, and eight landmark office buildings. The portfolio was diversified from both geographic and economic standpoints.