Portfolio managers strive to achieve their strategic goals and maximize their return on investments. This study is an analysis of portfolio attribution or how the fund manager decides where to invest and how to manage his customers’ funds. This is possible by creating portfolios based on different strategies and further analyzing the portfolio’s risk and returns. The objective is to gain insights helpful in improving the portfolio management process, its investment decision and strategy from risk and return perspective for achieving the desired investment performance. To attain this objective, the portfolio risk is analyzed on the basis of the multifactor model which features economic factors based on market, fundamental or technical data. This allows the portfolio managers to extend the use of the risk forecast from determining the expected level of risk to explaining where it is coming from and what actions should be taken to bring the portfolio into alignment. For a fundamental model the themes that are important in characterizing the behavior of securities are identified and then the asset exposure is determined. Then, factor volatilities are calculated and specific return and risk are determined. With this information, the asset’s risk as a combination of factor-related risk and specific risk is calculated. Factor-related risk is caused due to the assets exposure to each factor, the volatility and the correlations between factors. The portfolio risk is calculated in a similar manner by substituting portfolio-level exposures for asset-level exposures. Finally, returns of a portfolio are analyzed based on its sources when compared with its risk.

Portfolio management is a broad term that refers to the process of determining the structure and components of an investment portfolio based on a series of criteria specific to a set of individual circumstances and requirements. Portfolio is the totality of the liquid assets, which means money that we hold in cash, in fixed income securities, in individual stocks or equities, in insurance annuities or trusts and stock funds. Within these very broad categories, there are many subsets of assets; for example, fixed income products include mutual funds, highlyrated corporate debt, distressed debt and more. Stocks include everything from domestic small- to mid-caps, to constituents of the large cap S&P 500 index, to equities in emerging markets.

The prudent allocation of the capital among the sectors of a portfolio sits at the heart of a personalized and effective portfolio management strategy. There are internal as well as external factors that go into creating the right strategy. Some internal factors are income,risk tolerance, family situation and period to retirement, whereas the external factor is the direction of the market.

Financial Risk Management Journal, Portfolio, Attribution, Data and Methodology, Results, Discussion, Movement of BetaLarge, Cap Companies.