The strict distinction between foreign direct investment and portfolio investment has gradually eroded as a result of the rapid development and modernization of the world economy in recent decades and the continued refinement and greater availability of sophisticated international financial instruments that contribute to the financing of international investment projects. Today, therefore, there is no general prohibition on protecting portfolio investment through international investment protection instruments. The eligibility of a portfolio investment for protection in individual cases depends on the wording of each investment protection instrument: some investment agreements or national laws go further, others more narrowly. In essence, the question of whether a portfolio investment is covered by a particular investment protection instrument requires a case-by-case analysis of the scope of the underlying instrument. These sample phrases are automatically selected from various online information sources to reflect the current use of the word “portfolio”. The views expressed in the examples do not represent the views of Merriam-Webster or its editors. Send us your feedback. Portfolio investing encompasses a wide range of asset classes, including stocks, government bonds, corporate bonds, real estate investment trusts (REITs), mutual funds, exchange-traded funds (ETFs) and bank certificates of deposit. The composition of investments in a portfolio depends on a number of factors. The most important are the risk tolerance and the investor`s investment horizon. Is the investor a young professional with children, a middle-aged person looking forward to retirement, or a retiree looking for a reliable income supplement? In April 2000, heavy metal rock band Metallica sued online music retailer Napster for copyright infringement.
Several universities have also been named in this lawsuit. Metallica claimed that these universities were infringing Metallica`s music copyrights by allowing their students to access Napster and illegally exchange songs via the university`s servers. A number of universities had banned Napster prior to April 2000 because they feared possible copyright infringement and/or because Internet traffic was slowing down university servers. Yale University, named in the lawsuit, immediately blocked students` access to Napster. In this context, arbitral tribunals have historically distinguished between foreign direct investment on the one hand and portfolio investment on the other. Only foreign direct investment focused on investments in tangible assets, such as the sale and purchase of land or real estate and investment in a host country, which would allow an investor to exercise a certain degree of control over the investment, was considered eligible for protection under investment protection agreements, while portfolio investment – due to the lack of management control of the investor – was not considered as typical positive effects of foreign direct investment on the overall economy of the host country. However, the limits of such a distinction are gradually blurring in the application to the shares of investment companies. Therefore, according to the International Monetary Fund`s definition of direct investment,1 it is generally accepted that an interest of 10% or more in such an enterprise is considered eligible for protection and therefore constitutes a direct investment and not a portfolio investment. Investment funds and institutional investors are making portfolio investments on a larger scale.
For larger institutional investors, such as pension funds and sovereign wealth funds, this may include infrastructure assets such as bridges and toll roads. A portfolio investment is the ownership of a stock, bond or other financial asset in the hope that it will generate a return or increase in value over time, or both. This is passive or private ownership of assets as opposed to direct investment, which would involve an active management role. A portfolio investment can be anything from a stock or mutual fund to real estate or art. Those who want a more hands-on approach can optimize their portfolio allocation by adding additional asset classes to the portfolio mix, such as real estate, private equity, equities and individual bonds. Nglish: Portfolio translation for Spanish speakers ICSID tribunals have developed a test to help determine their own substantive jurisdiction, which can also be applied to determine whether a particular portfolio investment falls under an underlying investment protection instrument, typically a bilateral investment treaty in light of Article 25(1) of the ICSID Convention.