Key Terms
Portfolio
The complete set of an investor's holdings viewed as a single whole, and the level at which overall gains, losses and risk are ultimately measured.
By the Investfora Research Desk
A portfolio is everything an investor holds, viewed as a single whole rather than as a list of separate positions. The word covers shares, bonds, cash, property and anything else owned, whatever the mix. Its significance lies in the level at which it operates: individual holdings rise and fall on their own, but gains, losses and risk ultimately land on the whole collection. Two positions can move in opposite directions and partly cancel each other, so a portfolio's result is the net of everything inside it.
A worked example
Suppose a hypothetical portfolio worth £10,000 holds £6,000 of shares, £3,000 of bonds and £1,000 of cash. In one period the shares fall by 10 per cent, a loss of £600, while the bonds rise by 2 per cent, a gain of £60, and the cash is unchanged. The portfolio's net change is a loss of £540, or 5.4 per cent of the whole — considerably milder than the fall in the shares alone.
A portfolio's total value says nothing about what sits inside it. Two portfolios of identical size can differ entirely in concentration, liquidity and exposure, and the single figure at the bottom conceals all of that.