What does a portfolio trade involve?

A portfolio trade refers to the simultaneous buying or selling of a collection of securities rather than executing transactions for individual securities one at a time. This approach is often employed by portfolio managers to adjust the allocation of a portfolio in response to market conditions, investment strategies, or risk management considerations all at once.

Executing trades as a basket allows for better price execution, reduced trading costs, and enhanced efficiency, especially when rebalancing or shifting assets within the portfolio while maintaining the intended risk-return profile. This strategy is particularly important in managing large portfolios or when implementing strategies like index tracking, where the goal is to mirror the performance of a specific benchmark.

In contrast, other options focus on aspects that do not encompass the full scope of what a portfolio trade entails, such as trading in isolation or during specific time frames.