Coronation addresses the important issue of asset allocation in an investment portfolio
This is a fairly technical article written by its chief investment officer, who arguably is the top investment portfolio manager in the country. The salient points are summarised below:
Asset allocation is the most important decision in investments. This is deciding what portions of your investments are placed in equities, bonds, cash, property, local or offshore.
Results show that good asset allocation adds much better returns than good selections (alpha) in single asset funds. It enables funds to take full advantage of opportunities in the markets across different asset classes. i.e. adding a bigger toolbox to add value.
Risk is best managed by a manger that has sight of the overall portfolio and can reduce risk by blending asset allocations. This is the only way the trade off between risk and return can be fully understood and incorporated into a portfolio.
Over the last decade significant capital has moved to asset allocation (such as balanced) funds. In these volatile and uncertain times coupled with an expected lower return environment into the future, this is the best place to be.
Coronation’s key differentiator is its generalist approach to different asset classes enabling the team to make meaningful comparisons and ultimately producing good returns in both asset allocation (such as balanced) funds and single asset (such as equity) funds.
The bottom line is don’t invest exclusively in a single equity, bond, property, cash or offshore fund. Rather invest in a fund where these different asset classes are combined (such as a balanced fund) resulting in a likely far better return for the risks that are being taken.
At Investonline our investment advice approach is to balance and maximise ones risk and return dynamic. This is best achieved by ensuring your investments are managed by the leading professionals who have a deep understanding of an appropriate asset allocation.
Read the full article here.