FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS / QUALIFIED CLIENTS / SOPHISTICATED INSTITUTIONS ONLY
In the latest instalment of our ‘Portfolio of the future’ series, we outline why we believe the days of fixed or ‘set and forget’ allocations might be in the past.
Since the pandemic, we have been in a new era characterised by heightened uncertainty and dispersion in markets, and we believe this will persist and accelerate the evolution of portfolio construction practices. We think the model of fixed allocations to public markets could be significantly challenged right now and going forward. This is due to the increasingly frequent spikes in volatility in markets and in macro data, as well as changing correlations between fixed income and equities, resulting in diminished diversification benefits in the whole portfolio.
In this environment, we believe the portfolio asset mix matters more than ever, and strategic asset allocation should come to the fore of investment processes, underpinned by rigorous risk management. We also believe this environment calls for more dynamic asset allocation adjustments informed by more frequent assessments and implemented through investment vehicles that provide for greater granularity and flexibility in exposures. This approach could be key to continued success and delivering consistent portfolio outcomes going forward.
Risk Warnings
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Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time and depend on personal individual circumstances.
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