Portfolio Investment

Portfolio investments are investments in the form of a group (portfolio) of assets, including transactions in equity securities, such as common stock, and debt securities, such as banknotes, bonds, and debentures.[1]

Portfolio investments are passive investments, as they do not entail active management or control of the issuing company. Rather, the purpose of the investment is solely financial gain, in contrast to foreign direct investment (FDI), which allows an investor to exercise a certain degree of managerial control over a company. For international transactions, equity investments where the owner holds less than 10% of a company's shares are classified as portfolio investments.[2] These transactions are also referred to as "portfolio flows" and are recorded in the financial account of a country's balance of payments.

They are categorized in two major parts: foreign institutional investment and investments by non-residents. According to the Institute of International Finance, portfolio flows arise through the transfer of ownership of securities from one country to another.[3]

Portfolio investment covers a range of securities, such as stocks and bonds, as well as other types of investment vehicles. A diversified portfolio helps spread the risk of possible loss because of below-expectations performance of one or a few of them.

References

  1. ^ "Portfolio Investment, net (BoP, current US$)". World Development Indicators. World Bank. Retrieved 2014. 
  2. ^ "Sixth Edition of the IMF's Balance of Payments and International Investment Position Manual (BPM6)" (PDF). IMF. Retrieved 2014. 
  3. ^ "Portfolio Flows Tracker FAQ". IIF. Retrieved 2014. 



  This article uses material from the Wikipedia page available here. It is released under the Creative Commons Attribution-Share-Alike License 3.0.


Portfolio_investment
 



 

Connect with defaultLogic
What We've Done
Led Digital Marketing Efforts of Top 500 e-Retailers.
Worked with Top Brands at Leading Agencies.
Successfully Managed Over $50 million in Digital Ad Spend.
Developed Strategies and Processes that Enabled Brands to Grow During an Economic Downturn.
Taught Advanced Internet Marketing Strategies at the graduate level.


Manage research, learning and skills at defaultLogic. Create an account using LinkedIn or facebook to manage and organize your IT knowledge. defaultLogic works like a shopping cart for information -- helping you to save, discuss and share.


  Contact Us