Portfolio construction

Assembling individual decisions into a whole that behaves as intended.

Most of the work concerns how positions interact, and little of it concerns selection. Twenty good ideas that share one underlying exposure produce a concentrated portfolio wearing a diversified label, and the exposure that matters is often the driver, whatever the sector: interest rates, the rupee, the monsoon, or a single regulatory decision.

Sizing, correlation and liquidity are the three constraints that turn a list of ideas into a portfolio, and the third is the one most often ignored until it matters.

Map the drivers. A sector label can hide them.