Portfolio
The complete collection of investments held by an individual or institution, considered as one unit.
Formula
Portfolio Return = Sum of (Weight of each Holding x Return of that Holding)
Unit
₹
In depth
The defining insight of portfolio thinking is that a holding's risk is not its own volatility but its contribution to the whole — an asset that is volatile on its own can reduce portfolio risk if it moves opposite to everything else. This is why judging positions individually leads to worse outcomes than judging them by how they interact. A portfolio should be assessed on its total return, its total drawdown and its concentration, not on a scoreboard of winners and losers. Investors who track each holding separately tend to sell winners and hold losers, which is the disposition effect at work.
Worked example
Holdings of 40% at 15%, 35% at 6% and 25% at minus 4% give a portfolio return of 0.40 x 15 + 0.35 x 6 + 0.25 x (-4) = 6.0 + 2.1 - 1.0 = 7.1%. The loser reduced the total by one percentage point, not by 4%.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Portfolio” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.