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Portfolio investments are investments in the form of a group (portfolio) of assets, including transactions in equity, securities, such as common stock, and debt securities, such as banknotes, bonds, and debentures. [1]
Portfolio investment covers a range of securities, such as stocks and bonds, as well as other types of investment vehicles. A diversified portfolio helps spread risk, reducing the impact of underperformances by one or a few assets.
Unlike foreign direct investment (FDI), which implies a lasting interest and managerial control, portfolio investment is generally shorter-term, more liquid, and sensitive to fluctuations in global financial markets. [2]