Type of Equity Portfolio | S-I-P

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Nature of Investor & Nature of Portfolio of an investors are two different things altogether.

An Investor is either :-

  1. Conservative
  2. Moderate
  3. Aggressive

Conservative Investor is one who don’t want to take the risk of losing it’s principal investment.

Moderate Investor is one who takes minimal risk and expects stable growth in investment.

Aggressive Investor is one who who takes high risk and expects high growth in investment.

You can be any investor (based on nature) however your nature of portfolio will not be highly dependent on your nature .

You can be called aggressive if you invest highly in credit risk funds , low quality debt securities etc. hence, merely because you’re invested in equity doesn’t make you aggressive investor.

Type of Equity Portfolio

You can be a conservative investor even if you have invested in Equity based on your stock/mutual fund selection.

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However, what will be type of your equity portfolio will depend upon number of securities .

Also read :- How Many Stock Should be there in Portfolio ?

A Equity Portfolio can be :-

  1. Concentrated
  2. Focused
  3. Diversified

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Concentration Portfolio

A CONCENTRATED PORTFOLIO IS A HIGH-CONVICTION STRATEGY that can serve as an effective component of a well-executed asset allocation strategy.

It is the portfolio where you invests in less than 10-11 companies in which you’ve deep understanding of business & valuations and wherein keep concentrated on few number of companies due to which you can take timely decisions .

Any investor (Conservative , moderate or aggressive) can have concentrated portfolio.

However, downside risks is normally more in a bear market in concentrated portfolio

If invested in everything in single industry is not a good concentrated portfolio since it will be combination of aggressive investor with concentrated portfolio .

Focused Portfolio

For a retail investor a focused portfolio is one wherein number of shares are in range of 11-21 .

This basically is the combination of two concentrated portfolio however here top 10-15 stock make most of your holding.

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It also shares the same benefits as concentrated portfolio along with that it also has less down side risk as compared to concentrated portfolio.

However, if all of the investment is in same industry then this type of portfolio can be highly risky as compared to Concentrated portfolio.

Diversified Portfolio

It is the combination of three concentrated portfolio .i.e. the number of shares here are up to 30 wherein diversification is not only on account of Number of securities but also on account of business.

The potential downside is relatively less as compared to Concentrated or focused portfolio.

Which one is better ?

It will depend on an individual’s :-

  1. Understanding of Business
  2. Ability to handle high movements in stock prices
  3. Composition of investments


The above is for educational purpose only .

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