Asset Allocation

Asset allocation is simply creating an investment portfolio with holdings spread across the different asset classes - shares, property, fixed interest investments and cash.

The goal of asset allocation is to create a portfolio in a way that meets your particular needs, minimises risk, and compliments your investment objectives.

Inherent in asset allocation is the idea that the best-performing asset varies from year to year and is not easily predictable. Allied to this, different asset classes yield returns that move in opposite directions, in other words are not correlated.   Therefore having a mixture of asset classes reduces financial risk for a given level of expected return by lowering the variability of investment returns.

Reviewing an investment portfolio's asset allocation is like going for an annual health check up  You know it's the right thing to do, yet because it's time consuming, disruptive and if you are not showing any symptoms - it often gets put off. Regular monitoring of your asset allocation should help ensure that your investment portfolio remains healthy.

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