Through research conducted by us, we will examine and then balance the types of investments and assets within your portfolio, which in turn, reduces potential problems in the future. Once your portfolio has been established regular reviews should take place to ensure that it continues to meet your original requirements, making any changes necessary to reflect your financial circumstances or your views on future market opportunities. Your objectives are likely to change over the years and so these reviews will be invaluable.
Over time the different returns on the various asset classes will have affected the balance of your portfolio. An ideal portfolio, at the outset, is likely to be fundamentally different in a few years and may not meet with your investment attitude. This creates the essential need for regular reviews to highlight and adapt to the changing circumstances.
The general belief is that the greater the level of risk the greater the anticipated return should be to compensate for the extra risk undertaken. However this doesn’t always work and investments can go down as well as up.
Diversification is the inclusion of a range of different asset classes within a portfolio to reduce the overall level of risk undertaken and to protect the investments from exposure to one adverse event, or change in sentiment about a particular asset class. Being invested in different asset classes can also help to reduce the risk, as negatively correlated assets will tend to move in opposite directions to one another. So, if the equity markets are falling, the fixed interest market may be rising, which offsets some of the losses.