There are enough negative factors in play to suggest great caution with asset allocation in portfolios, as a wonderful run of results for investors came to an end in 2018. Here are four common factors in market collapses.
Tag Archives | portfolio construction
What does a portfolio look like when someone with access to almost every asset class and manager in Australia takes a genuinely long-term view, building the portfolio from the ground up?
An efficient diversified portfolio might include unfamiliar assets with short-term volatility. It’s important to focus on a comfort level to attain the long-term benefits of diversification in a portfolio.
Australian retirees’ access to dividend imputation refunds justifies a bias towards Australian equities in retirement, and the loss of refunds will have significant portfolio and income implications.
Indexing has come under increasing criticism as it has grown rapidly. Three issues dominate the arguments but the indexing benefits of low cost and diversification means active and index funds have a symbiotic relationship.
There is no correct answer to the maximum or minimum amount of exposure to a single company in a portfolio, but liquidity, risk and costs play into the decision.
Any person responsible for constructing an investment portfolio must make decisions about asset allocation, requiring educated guesses about future returns. Are these results the Wisdom of Crowds?
A quick and simple demonstration of how diversification reduces the volatility of returns, which should be of interest to investors concerned about capital preservation nearing retirement.
At a time when technology and society are forcing fundamental change on businesses, there is logic in adding ‘shorting’ to portfolio management. But it’s not simply the opposite of going ‘long’.
A common observation at the moment is that if interest rates ‘can only go up’, why hold bonds? While prices fall as rates rise, there is a role for various maturities in a diversified portfolio.
When building an investment portfolio it’s a good idea to buy quality companies at a discount to intrinsic value. But what is that, and how does it fit into portfolio construction?
Cuffelinks reader, James, has some additional questions covering: bonds for capital gain or income, bonds in a growth strategy, passive vs active investing, unconstrained bond funds and duration risk.
Australian index-based equity portfolios are often concentrated by company and sector. Some other goal-based strategies might be a better fit for your investments but clients and advisers will need to drive this change.
The use of leverage within SMSFs has come under heavy scrutiny lately with strong arguments for and against. Some forms of ‘protected’ gearing can help manage risk, demonstrating that not all gearing is the same.