Portfolio Structure (Asset Allocation) Explains Performance
Monday 14 May 2007
Studies have shown that at least 94% of the variability of portfolio return can be attributed to the exposure of a client’s capital to the major asset classes and sub-asset classes of cash, fixed interest, property and equities. By taking an academically proven approach to measuring a client’s risk tolerance, we can determine the most appropriate allocation to these asset classes, which will ultimately guide an investor towards the fulfillment of their goals and objectives.
That is, once a strategic asset allocation benchmark has been established, clients can avoid unnecessary stress in times of market downturns, as their benchmark position is specifically designed to maximise the ability to achieve long-term financial goals regardless of short-term market cycles.
Over time, it is important to note that investment portfolios can move away from their benchmark positions. This is because each asset class and sub-asset class behave in different ways at different times.
To manage this, Murray Round conducts periodic reviews of client portfolios, and rebalances them back to the long-term strategic asset allocation benchmark. This is done with sensible tolerances for the natural movement in asset classes and sub-asset classes
over time, which helps ensure the costs and taxes associated with rebalancing are minimised.
Categories: Asset Class Management, Benchmarking, Wealth Management
posted by Murray Round Wealth Management @ 19:27,
The Authors
Nicholas Round
Nic is the Managing Director of Murray Round Wealth Management Limited, who seeks to ensure the advice provided is truly independent. Based in Shropshire with clients local, national and worldwide, Nic has strived to find the best possible service for his clients needs, by researching and studying the market, trends and philosophies. Nic strongly believes Asset Class Management will bring his clients Financial Freedom, Independence and Happiness.
Kirsty
Kirsty is our communication guru. Managing information requires considerable due diligence and her passion for organisation gives the clarity we all seek. From Shropshire, with a Psychology Degree and much travelling, she is now back in Shrewsbury...and London often, keeping us all at Murray Round focused.
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