What is a zero -investment portfolio?

Portfolio of zero investment is a financial portfolio, which is composed completely or mainly securities that cumulatively lead to a net value of zero. In some cases, economists consider portfolios to be zero investment portfolios if the resulting net value is almost zero. In general, the investor will try to achieve a portfolio of zero investment for reasons for the rules of arbitration.

In order to understand the concept of zero investment portfolio, it is necessary to understand the basics of arbitration. Arbitration is essentially the process of buying certain amounts of securities in one market, while selling the same amount of the same or similar securities on the other market. In some cases, the principle of arbitration is also used to purchase and sell securities with a similar value on the same market. The point of arbitration is to minimize the overall risk of losing money while taking advantage of money.

As used on zero investment portfolio, use of arbitration to protectThe total value of the financial portfolio creates a situation where the investor is protected from shifting to the investment market, which can occur without warning. Because the aim of trading is to maintain the value of portfolio, profits and losses usually can balance the value. The result of this zero net value will be a small or no interest income subject to tax, a high level of financial security for the investor and potential to consider more risky investments later.

Often this condition of zero investment portfolio is carried out by careful purchase and short -circuit of the same amounts of securities. This will require the investor to carefully monitor market activity to maintain the correct balance between the acquisitions for portfolio and selling items south. The portfolios of this type are ideal for a conservative investor because they can provide practical experience in choosing securities and learn to track market indicators without having a high risk.