This feature is available in Enterprise and Ultimate editions.
A Portfolio Item is a high-level entity consisting of large-grained features used for planning and grouping project work leading to a finished product that holds business value. For planning the breakout of work across sprints/iterations, you can decompose a portfolio items into even smaller portfolio items and stories/backlog items to provide additional detail.
Using Portfolio Items in Your Agile Practice
With portfolio items, you begin planning with a single, large, roughly-defined feature, and through additional investigation and discussion with the product team(s), you can break down the single large feature into smaller components that can be delivered by one or more project teams. Stories are eventually defined at the bottom level of the hierarchy. These stories are small enough for the project teams to deliver within a sprint/iteration while still recognizing the relationship of the various components as being part of a single larger whole.
Use the Type field on portfolio items to define the levels of your Portfolio Tree. This allows you to use your internal terms for large, medium, and smaller grained features. You can have any number of levels, and therefore any number of types, in your Portfolio Tree, Portfolio Kanban, Portfolio Timeline, Portfolio Item details. You can even assign custom colors to each type to help you to easily identify them at a glance. To learn more, see List Type Administration.