Portfolio Pumping

AAA

DEFINITION of 'Portfolio Pumping'

The illegal act of bidding up the value of a fund's holdings right before the end of a quarter, when the fund's performance is measured. This is done by placing a large number of orders on existing holdings, which drives up the value of the fund.

Also known as "marking the close".

INVESTOPEDIA EXPLAINS 'Portfolio Pumping'

Portfolio pumping can be highly destructive for investors in the fund because it is a temporary gain and the stocks will generally fall back to previous levels once the price manipulation is over. For example, if a fund has 1,000 shares of ABC purchased for $10 per share, if the shares are trading at $9 right before the managers' performance is measured, they will have performed poorly. As a result, the managers may resort to portfolio pumping and place enough orders to bid the price to $14, dramatically increasing the fund's performance. However, it is likely that the shares will fall back towards $9, leaving investors with a $9 stock that was made to look like a $14 stock.

RELATED TERMS
  1. Poop And Scoop

    A highly illegal practice occurring mainly on the internet. A ...
  2. Pump And Dump

    A scheme that attempts to boost the price of a stock through ...
  3. Securities And Exchange Commission ...

    A government commission created by Congress to regulate the securities ...
  4. Bucketing

    A situation where, in an attempt to make a short-term profit, ...
  5. Performance Audit

    An audit performed on an asset manager by an outside accounting ...
  6. Churning

    Excessive trading by a broker in a client's account largely to ...
Related Articles
  1. 4 Dishonest Broker Tactics And How To ...
    Personal Finance

    4 Dishonest Broker Tactics And How To ...

  2. The Short And Distort: Stock Manipulation ...
    Active Trading Fundamentals

    The Short And Distort: Stock Manipulation ...

  3. How does a pump and dump scam work?
    Investing

    How does a pump and dump scam work?

  4. Eliot Spitzer - Man Of A Thousand Scandals
    Insurance

    Eliot Spitzer - Man Of A Thousand Scandals

comments powered by Disqus
Hot Definitions
  1. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  2. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Budget Deficit

    A status of financial health in which expenditures exceed revenue. The term "budget deficit" is most commonly used to refer ...
Trading Center