Zero-Investment Portfolio

Zero-Investment Portfolio
A group of investments which, when combined, create a zero net value. Zero-investment portfolios can be achieved by simultaneously purchasing securities and selling equivalent securities. This will achieve lower risk/gains compared to only purchasing or selling the same securities.

Zero-investment portfolios have many uses, including:
1. Reducing taxes, because they generate little or no interest income.
2. Reducing risk by protecting against unexpected shifts in the value of the held securities.
3. Protecting the overall value of the portfolio so that investment can be made at a later date.
4. Determining if the average portfolio returns are statistically different from zero.

For example, if John bought (that is, took a long position) one share of XYZ Corp., he would be fully exposed to the change in value of that stock. If, however, John sold the same stock (that is, took a short position), then any movement up or down would be canceled out. The combination of these two positions creates a zero-investment portfolio.


Investment dictionary. . 2012.

Игры ⚽ Поможем сделать НИР

Look at other dictionaries:

  • Zero-investment portfolio — A portfolio of zero net value established by buying and shorting component securities, usually in the context of an arbitrage strategy. The New York Times Financial Glossary …   Financial and business terms

  • zero-investment portfolio — A portfolio of zero net value established by buying and shorting component securities, usually in the context of an arbitrage strategy. Bloomberg Financial Dictionary …   Financial and business terms

  • Investment trust — Investment trusts are companies that invest in the shares of other companies for the purpose of acting as a collective investment.cite web title = Investment Trusts work = Your Money publisher = The Motley Fool date= 13 March 2006 url =… …   Wikipedia

  • Modern portfolio theory — Portfolio analysis redirects here. For theorems about the mean variance efficient frontier, see Mutual fund separation theorem. For non mean variance portfolio analysis, see Marginal conditional stochastic dominance. Modern portfolio theory (MPT) …   Wikipedia

  • Application Portfolio Management — IT Application Portfolio Management (APM) is a practice that has emerged in mid to large size Information Technology (IT) organizations since the mid 1990s. Application Portfolio Management attempts to use the lessons of financial portfolio… …   Wikipedia

  • Dedicated Portfolio Theory — Dedicated Portfolio Theory, in finance, deals with the characteristics and features of a portfolio built to generate a predictable stream of future cash inflows. This is achieved by purchasing bonds and/or other fixed income securities (such as… …   Wikipedia

  • Constant proportion portfolio insurance — (CPPI) is a capital guarantee derivative security that embeds a dynamic trading strategy in order to provide participation to the performance of a certain underlying asset. See also dynamic asset allocation. The intuition behind CPPI was adopted… …   Wikipedia

  • Портфель с нулевыми инвестициями — портфель, чистая стоимость которого равна нулю, что достигается за счет покупки и короткой продажи составляющих его ценных бумаг в рамках арбитражной стратегии. По английски: Zero investment portfolio См. также: Инвестиционные портфели Финансовый …   Финансовый словарь

  • ECONOMIC AFFAIRS — THE PRE MANDATE (LATE OTTOMAN) PERIOD Geography and Borders In September 1923 a new political entity was formally recognized by the international community. Palestine, or Ereẓ Israel as Jews have continued to refer to it for 2,000 years,… …   Encyclopedia of Judaism

  • Retirement — For other uses, see Retirement (disambiguation). Finance Financial markets …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”