What Is Strategic Portfolio Management?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 04 December 2018
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Strategic portfolio management is a type of investment approach that involves setting specific goals for the investment portfolio in terms of the range of investment types contained in the portfolio or the total monetary value of the portfolio. The process also usually involves setting specific goals in terms of the overall worth of the portfolio as of a future date in time, allowing the investor to effectively have a goal to work toward when buying, selling, and holding different types of assets. The actual process of strategic portfolio management may be handled by the investor, or may involve the services and support of an investment counselor or manager who handles the day to day issues related to the portfolio.


Several different tools may be used as part of a strategic portfolio management course of action. Typically, the investor and the portfolio manager will agree on the goals associated with the portfolio. Those goals may have to do with achieving a certain balance between the different types of assets that are secured and held. For example, the goal may be to maintain more or less equal percentages of stocks, real estate, bond issues, and commodities in the portfolio, providing a diversified situation that helps the investor to avoid significant losses in the event of changing economic climates. At other times, the diversification may have more to do with acquiring shares of stock related to companies in several different industries, rather than investing primarily in one industry. The composition of the portfolio will usually depend on the goals set by the investor.

Another aspect of strategic portfolio management is determining how much authority the portfolio manager has in terms of managing the assets in the portfolio. The investor and manager may establish certain guidelines that allow the manager to do so much trading on behalf of the investor without the need to obtain permission first. Any transaction over a certain amount would require a discussion and the approval of the investor before the transaction could take place. This arrangement allows the investor to take advantage of the expertise of the manager in making changes to the portfolio, while also still being involved in the selection of different assets for inclusion in the portfolio.

There is no one ideal way to go about strategic portfolio management. The basics of setting measurable goals, settling on the combination of assets to include in the portfolio, and developing a process for the management of those assets are all part of the basic process. The particulars of each of those three basics will vary, depending on the amount of money the investor can reasonably afford to use for establishing the portfolio, and what type of financial goals are in place.



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