Is there a difference between portfolio value and portfolio benefits?

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At a recent SIG event a delegate asked the above question, which caused a few head itching moments for us committee members. The question above is very different from the value and benefit of portfolio management, which includes the practical ways in which we go about making portfolios happen efficiently and effectively, from identification to delivery.

The dictionary says that value can be defined as worth. So for an actively managed portfolio, implemented at any level, should worth always be articulated in the common business language of financial value? Surely, if the worth, whatever it may be, is risk adjusted, and for future opportunity, isnt that why we invest in change after all? I hear many screaming already that not every portfolio has financial value. Sometimes we do things for the greater good of mankind. This begs the question: why would any organisation invest in any portfolio of change without a clear financial value?

One answer is that value may be very different to the benefits of having a portfolio. The benefits could involve many reasons for focusing an organization to invest its resources on what it needs to deliver. Benefits could be driving difficult decision making, or bringing about a benefits (=focused) culture, or developing new organizational capability which will bring the best chance of overall business success.

Is the difference really that simple? Or do we make portfolios more complex because we can, and is the value of a portfolio nothing more than the sum of its partsbenefits, financial and otherwise?

If you have any views or thoughts on portfolio value vs benefits, and whether theyre the same or different then please drop us a line.

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Posted by Christine Rigby on 21st Dec 2012

About the Author
Christine is a committee member of the APM Portfolio Management SIG.

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