The purchase of stocks, bonds, and money market instruments by foreigners for the purpose of realizing a financial return, which does not result in foreign management, ownership, or legal control.

Some examples of portfolio investment are:

• purchase of shares in a foreign company.
• purchase of bonds issued by a foreign government.
• acquisition of assets in a foreign country.
• purchase of stocks in a foreign company.

Factors affecting international portfolio investment:

• tax rates on interest or dividends (investors will normally prefer countries where the tax rates are relatively low)
• interest rates (money tends to flow to countries with high interest rates)
• exchange rates (foreign investors may be attracted if the local currency is expected to strengthen)

Portfolio investment is part of the capital account on the balance of payments

Balance of payments

Balance of payments accounts are an accounting record of all monetary transactions between a country and the rest of the world.These transactions include payments for the country's exports and imports of goods, services, financial capital, and financial transfers...

 statistics.

A portfolio investment is in contrast to a direct investment.

External links

• R-Portfolio - breakeven optimally diversified investment portfolio. Open software project.