What Is a Portfolio Plan? A portfolio plan is an overall strategy that guides day-to-day decisions on investing for the long term. Portfolio planning takes into account the investor’s goals and tolerance for risk, among other factors. A portfolio plan guides the investing decisions of large pension funds and high-net-worth individuals but its principles can
What Is Portfolio Reinsurance? Portfolio reinsurance, also known as assumption reinsurance, is a type of transaction in which one insurance company transfers a large number of its existing insurance policies to another. It is typically employed when the company seeking portfolio reinsurance wishes to cease operating within a particular segment of the insurance market. Key
What Is Portfolio Return? Portfolio return refers to the gain or loss realized by an investment portfolio containing several types of investments. Portfolios aim to deliver returns based on the stated objectives of the investment strategy, as well as the risk tolerance of the type of investors targeted by the portfolio. Key Takeaways A portfolio return is a
What Is Portfolio Runoff? Portfolio runoff means assets with a finite term are not replaced as they mature. When the principal invested in a fixed-income security with a set maturity is repaid, the investor must decide whether to reinvest it. When the proceeds from matured bonds are not reinvested, a portfolio can be said to
What Is a Portfolio Sale? A portfolio sale is the sale of a large group of related financial assets in a single transaction. A portfolio sale, sometimes called a “bulk sale,” is common in the secondary mortgage market. Freddie Mac and Fannie Mae are two of the most prominent players in this market; they purchase portfolios
What Is Portfolio Variance? Portfolio variance is a measurement of risk, of how the aggregate actual returns of a set of securities making up a portfolio fluctuate over time. This portfolio variance statistic is calculated using the standard deviations of each security in the portfolio as well as the correlations of each security pair in
What Is Portfolio Weight? Portfolio weight is the percentage of an investment portfolio that a particular holding or type of holding comprises. The most basic way to determine the weight of an asset is by dividing the dollar value of a security by the total dollar value of the portfolio. Of course, if the portfolio
What Is Position Sizing? Position sizing refers to the number of units invested in a particular security by an investor or trader. An investor’s account size and risk tolerance should be taken into account when determining appropriate position sizing. Understanding Position Sizing Position sizing refers to the size of a position within a particular portfolio
What Is a Positive Butterfly? A positive butterfly is a non-parallel yield curve shift that occurs when short- and long-term interest rates shift upward by a greater magnitude than medium-term rates. This shift effectively decreases the overall curvature of the yield curve. A positive butterfly may be contrasted with a negative butterfly, and should not
What Is Positive Carry? The term positive carry refers to a strategy that involves two different positions where the inputs end up being greater than the outputs. Investors often use a positive carry strategy by investing borrowed capital and making a profit on the difference between interest earned and interest paid. This strategy is commonly
