22ND NOVEMBER 2020
What is asset allocation?
While much emphasis is placed on stock picking or selecting the next star fund manager, individual investors can often overlook the importance of asset allocation in their investment portfolios.
Asset allocation is the process of adding different asset classes to a portfolio in order to strengthen it during volatile periods and achieve a desired level of risk and return.
Pinnacle Investment Management’s Head of Retail, Ramsin Jajoo, says asset allocation is a key ingredient for the construction of ‘sleep at night’ portfolios.
“Investing shouldn’t keep you up at night, so to avoid major portfolio volatility investors can aim to construct robust portfolios by adding different asset classes with low correlations,” said Mr Jajoo.
“In simple terms, this means when one part of the portfolio – or asset class – goes down, you can have a level of confidence that other parts of the portfolio will remain stable, or even rise.”
Determining a suitable asset mix is dependent on how much risk an investor is willing to take on.
Mr Jajoo says specialist boutique investment managers can assist investors seeking to construct diverse and robust portfolios that can weather the storm across all market conditions.
“When it comes to global and domestic equities, specialist boutique managers can provide quality exposures to different investment styles such as value and growth and small and large caps,” said Mr Jajoo.
“Other boutiques can provide highly differentiated fixed income strategies across bonds and fixed interest and there is increasing demand for specialist management in highly uncorrelated assets such as agriculture and infrastructure.
You can view the diverse range of asset classes under management across Pinnacle’s boutiques here.
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