We live in a world of 24-hour news with information feeding instantly to screens that bombard us from walls, desks and our phones.
It’s the long-term goals our clients are aiming for, as well as tried and tested investment principles, that form the basis of how we manage our portfolios. Keeping these to the fore of our thinking helps us turn down the distraction of short-term noise. Diversification is perhaps the most fundamental, as spreading your portfolio across a host of different investments provides two key benefits: access to a range of opportunities for income or growth, and spreads the risks that are an inherent part of investment.
Of course, the types of investment – individual funds across a range of asset classes – we consider when building a portfolio are driven by what outcome we are seeking to achieve. There are a number of elements to these asset allocation decisions. First, there are strategic considerations that are typically long-term in nature. For an income portfolio, for instance, there will be an emphasis on yield-generating investments through the likes of bond and equity income funds alongside some of the more esoteric options that exist today. Contrast the asset allocations of our Distribution and Boutique portfolios and you’ll see how different target outcomes lead to different asset mixes.
Second comes tactical moves, where active adjustments can be made to account for near-term opportunities and risks. Whilst Brexit associated uncertainty may have prompted a relatively cautious stance towards UK equities, there comes a time when an upward readjustment of positioning to take advantage of valuations and the opportunities that do exist makes sense.