Portfolio Management
Investment Selection
The selection of the appropriate asset allocation and investments selected must take into consideration the level of risk in relation to your personal and financial circumstances. MONTPELIER will assess your risk profile by taking into account the following factors:
- The period over which you will be investing.
- The likelihood of you needing to access your investments.
- Your degree of comfort with short-term market fluctuations
Once the overall investment objective has been established, the approach used to determine the suggested allocation of a portfolio between the various asset classes is essentially a "top down" approach using "tactical asset allocation".
The overall investment philosophy is that asset allocation is the most important factor in the portfolio performance and that the global and individual country macro economic environment determines the relative attractiveness of the various asset classes at any particular time.
Once the overall asset allocation has been determined then the individual assets or funds to be invested within each asset class will need to be determined.
Initially, the funds available need to be filtered according to their investment objective and risk profile to ensure they match the desired profile from the asset allocation process. Each fund is analysed individually through a combination of qualitative and quantitative analysis.
The fund selected for investment is monitored against the relative benchmark on an ongoing basis. If the performance of the individual fund changes relative to its previous history and the benchmark this would flag the need for a review of the fund selected
A well balanced portfolio should be diversified among the major assets classes: Cash, fixed income, large and small companies both growth and value, domestic/international.
The greater the diversification the lower the risk so a world-wide fund is a good place to start. This means that an economic downturn in one country will not necessarily be reflected in others and therefore will have a limited effect on the overall performance of your fund.
An MONTPELIER adviser will help you select a portfolio to suit your financial needs and time horizon within a risk category that you are comfortable with.
