Types of Portfolios
Investment portfolios are of different types and investors believe in creating a portfolio that would fulfill their investment objective and risk appetite.
1. Growth Portfolio: The prime objective of this portfolio is to foster growth by considering the potential risks and investing in the companies that are growing. Higher returns and higher risk are part and parcel of the growth portfolios. Usually, investments in younger companies have the potential for higher growth compared to those already established big corporations.
2. Income Portfolio: An income portfolio’s prime goal is to maintain a continuous flow of income from the different investment options instead of focusing on potential capital growth. For example, income-minded investors would rather invest in stocks that reap regular dividends, than the trend of growth in value. Further, fixed-income assets generally offer regular income to investors, thus investors looking for steady returns can invest in this form of portfolio.
3. Value Portfolio: In a value portfolio, investors purchase cheap assets due to their low valuations and look for opportunities to generate profits in the investment market. During economic turmoil, when companies and markets struggle to survive, these portfolios are used by value-oriented investors as they can invest in those shares of companies whose prices have lowered compared to the fair value. Again when the market revives, investors in these portfolios can generate higher profits by selling their investments.