The first step in portfolio analysis is to understand where your current investments are. This analysis is to be done on two aspects
Let us take an empirical example to dive deeper into this.
I have invested ₹100K in total into equity stocks, mutual funds, and fixed deposits. So, I have three asset classes. Now I summarize the investments in these asset classes as per table below.
| Asset class | Invested amount | Asset allocation of Investment |
| Equity stocks | ₹ 30,000 | 30% |
| Mutual funds | ₹ 30,000 | 30% |
| Fixed deposits | ₹ 40,000 | 40% |
Next step, I must determine the allocation in each asset class
Let us say the table below shows all my investments
| Asset class | Asset | Invested amount | Asset allocation of Investment |
| Equity stocks | Infosys | ₹ 10,000 | 10% |
| Equity stocks | State Bank of India | ₹ 10,000 | 10% |
| Equity stocks | ICICI Bank | ₹ 10,000 | 10% |
| Mutual funds | Sundaram Corporate Bond Fund | ₹ 10,000 | 10% |
| Mutual funds | Canara Robeco Equity Taxsaver Fund | ₹ 20,000 | 20% |
| Fixed deposits | ICICI Bank | ₹ 20,000 | 20% |
| Fixed deposits | State Bank of India | ₹ 20,000 | 20% |
Now, I have listed down all my assets and the categorized them into respective asset classes. I have also determined the % of asset allocation when I invested these funds. For simplicity sake, let us assume all the investments are made on a single date say 1-jan-2019.
Next, I must find the market value of all these investments. For equities we can use the current market price, for MF we take the last published NAV and for FD, we take the accrued interest + investment.
Summarizing the investments’ current market value, I see the following:
| Asset class | Asset | Invested amount | Asset allocation of Investment | Current market value | Current asset allocation |
| Equity stocks | Infosys | ₹ 10,000 | 10% | ₹ 12,000 | 11% |
| Equity stocks | State Bank of India | ₹ 10,000 | 10% | ₹ 10,500 | 9% |
| Equity stocks | ICICI Bank | ₹ 10,000 | 10% | ₹ 12,500 | 11% |
| Mutual funds | Sundaram Corporate Bond Fund | ₹ 10,000 | 10% | ₹ 10,850 | 10% |
| Mutual funds | Canara Robeco Equity Taxsaver Fund | ₹ 20,000 | 20% | ₹ 22,000 | 20% |
| Fixed deposits | ICICI Bank | ₹ 20,000 | 20% | ₹ 21,600 | 19% |
| Fixed deposits | State Bank of India | ₹ 20,000 | 20% | ₹ 22,050 | 20% |
So, now I have my investments and the current market values identified and I now know the current asset allocation of my portfolio.
Next step is to determine the optimal asset allocation for my financial goal. We will discuss that in the next post.
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