Introduction Portfolio management is crucial for investors who want to earn a return when investing in publicly traded equities/securities. The selection of securities in a portfolio depends on the level of risk that investors find acceptable. Through effective portfolio management and diversification, investors can manage the systematic risk associated with a particular security. Moreover, it is essential to understand the trade-off between risk and return, meaning that an investor who aims to achieve a high return on an investment must accept a higher level of risk associated with specific investment decisions. In this report, an investor’s active and passive portfolios were created by selecting securities presently trading in a capital market in the Middle East. Managing an active portfolio involves active trading of stocks with an aim to outperform a specific index as chosen in this report. In contrast, managing a passive portfolio does not involve active securities trading. The purpose of this portfolio management exercise was to create active and passive portfolios comprising securities traded on the Abu Dhabi Stock Exchange (ADX) and the Standard and Poor’s (S&P) 500 and evaluate their performance over a period of eight weeks from May 1, 2018 to June 30, 2018. The decisions assumed for developing and managing these portfolios were based on the investor’s objective and constraints. Furthermore, the performance of these portfolios was evaluated on the basis of the comparison of the return achieved from each. The investment decisions were based on the stock analysis carried out in this report. Objective The investor’s objective assumed in this report was the desire for a high return on investment and willingness to accept the high risks associated with decisions to invest in different securities. It was decided that 100% of the investment would be made in equity, considering the high level of risk tolerance, rather than specific allocation of funds to fixed income securities. The investor wanted to achieve capital gain from an increase in prices of selected securities rather than receiving income in the form of dividends. He selected securities listed on both the ADX and the S&P 500 in managing the active portfolio. In comparison, the investor chose securities listed on the ADX only for the passive portfolio. Investor’s Constraints The total investment fund available to the investor was AED 2 million. This implies that the total purchase value for each week could not exceed this amount in both portfolios. Therefore, AED 1 million was allocated to each portfolio. Both portfolios contained only five stocks selected on the basis of the abovementioned objective. Furthermore, a time constraint was involved as both portfolios were only managed for eight weeks. No tax implications were considered in this report. Portfolio Selection and Performance Active Portfolio For the active portfolio, the investment strategy was to invest in high-tech stocks listed on the S&P 500. The reason for choosing this strategy was that high-tech stocks could be expected to generate returns that would outperform the benchmark index. The reason for selecting specific stocks was recent high performance that contributed significantly to the val