Why invest in different asset classes?

Thursday, September 07, 2017

When we invest a client’s money, we have three key aspects that we must consider before we commence.

These are quite simply:

These simple questions will then dictate the asset allocation of your investment portfolio

So, what is asset allocation?

Technically, it is an investment strategy that aims to balance risk and reward by apportioning a portfolio’s assets according to an individual’s goals, risk tolerance and investment horizon.

Put more simply, the answers to the three questions above will dictate the asset balance of your investments to ensure that your portfolio does what is excepted of it. The ultimate solution is to have the right exposure of Equity, Property, Gilts, Bonds and even other assets such as Gold and other Commodities to ensure you get excellent performance with the level of risk that you can tolerate.

The Core portfolios we use in our Centralised Investment Proposition are built on a fixed strategic asset allocation. This strategic asset allocation considers the long term view of the combination of asset types most appropriate to an investor’s risk profile. This view is regularly reviewed and monitored, to establish the appropriate mix of asset classes.

We then analyze the Multi Asset Fund market to pick those managers that we consider have excelled in this form of investment management and then we blend these Multi Asset propositions together to build a low cost risked based multi asset proposition. The aim is to take the best parts of these investment houses to create an investment strategy that suits your own circumstances.

We consider it crucial that we always recommend a mix of asset classes. In our experience, investing solely in one specific sector such as Equities or Property is simply too high a risk for an investor to take. Further to that, we may miss opportunities that are on offer in other sectors. The aim is ALWAYS to balance both risk and reward.

The overall strategy is always to ensure that your investment proposition is suitable for your circumstances, whatever those circumstances may be.

To read about this in more detail, have a look at our Centralised Investment Proposition brochure by clicking here.

* The value of investments and income from them may go down. You may not get back the original amount invested.