Granular Portfolio

What Does Granular Portfolio Mean?
A type of portfolio that is well diversified across a wide variety of areas, typically with a significant number of holdings. Because these portfolios contain a large number of positions over many areas, they are considered to have a lower overall risk profile. Conversely, portfolios that have "low granularity" have fewer positions or contain highly correlated assets, are less diversified and have a higher overall risk profile.

Investopedia explains Granular Portfolio
This term is typically applied to credit portfolios, but it can also be used when analyzing currency, equity and bond portfolios. Highly granular portfolios, sometimes referred to as infinitely granular, diversify most of the unsystematic risk (individual security risk) out of the portfolio so that the overall portfolio only faces systemic risk, which can't be easily diversified away. Highly granular portfolios tend to garner their income from a number of projects and/or sources, while less granular portfolios depend on a fewer projects or sources for their incomes.

Related Terms

Diversification
Macro Risk
Portfolio
Price Risk
Risk-Return Tradeoff
Systematic Risk
Unsystematic Risk
More Related Terms

Related Links

In Praise Of Portfolio Simplicity - Find out how you can streamline your investments for greater returns.
Risk And Diversification - Safeguarding your portfolio involves a few simple steps.
Modern Portfolio Theory: An Overview - See why investors today still follow this set of principles to reduce risk and increase returns through diversification.
Introduction To Diversification - Reducing risk and increasing returns in your portfolio is all about finding the right balance.
Do You Understand Investment Risk? - Many investors overestimate their level of financial knowledge.

Rate this Term: Your Rating: Overall Rating: Vote Now!