Portfolio Segmentation

Definition

Portfolio Segmentation denotes the splitting of a Portfolio of financial assets into smaller components (sub-portfolios) according to some defined characteristics.

Segmentation Objectives

The objective of portfolio segmentation is to help optimize Portfolio Management but potentially many other business objectives as well. Segmentation is distinct from Portfolio Stratification or Portfolio Aggregation exercises which aim to provide views into Portfolio Information without altering the context in which portfolio assets are managed.

Segmentation Characteristics

Segmentation can be meaningful along any of the following dimensions

• regulatory requirements
• the market segment
• the origination channel (e.g. online, branch etc)
• the geographic location
• the cohort (origination period)
• the underwriting criteria (if there is significant change in policies)

See Also

• Portfolio Scope