The key determinant in the variation of returns in an investment portfolio is efficient asset allocation.

Having established your acceptance of risk and agreed upon a personal risk score, our next step is to design a risk graded portfolio that blends and allocates the money available for investment.

Asset allocation is the mix of underlying asset classes held within an investment portfolio, with each asset class behaving differently and having very different risk profiles. We use the following main asset classes when building a portfolio:

• Cash / Money Markets
• UK Fixed Interest
• International Fixed Interest
• Property
• UK Equity
• International Equity ~ this further sub-divided into North America, Japan, Europe, Far East, Emerging Markets and Global Specialist.

 

There have been various academic studies over the years that have shown that asset allocation is the single most important factor in determining the returns of an investment portfolio, with other factors like fund selection or market timing being not so important.

That being said, we do believe the selection of fund manager and fund or stock can make a difference to the performance of portfolios, but in doing so it is vitally important to have in situ a robust, reliable and consistent approach to fund selection…..