Now is the time to review your portfolio
Thursday 2 October 2008
Alan Greenspan, former Chairman of the US Federal Reserve and political commentator, John Plender of the FT, have said “...they have never, in their working lifetimes, seen anything like this…”
They are referring to the collapse of Lehman Brothers.
John Authers of the FT has said "...it is the end of the decade of moral hazard.
Such words certainly make me sit up and take notice. How does it make you feel?
Have you considered the implications on your portfolio? What course of action should you consider?
There is no need to panic, as perhaps Corporal Jones of the classic TV show Dads Army would have said, but there is a need to take systematic and thoughtful action.
Reviewing your portfolio is important to ensure you are fairly rewarded for the risks you are taking.
Investors are rarely educated in the fact that 'structure explains performance', where your assets are deployed has more effect on return than who is actually managing them. Setting an asset allocation that has the right risk and return characteristics, and diversifying within and across asset classes, is both prudent and effective for most investors with their critical capital. Speculating on individual stocks or individual manager skill is adding an extra layer of risk that is not necessarily going to reward you in the long run.
James Bevan, chief investment officer, of the CCLA, specialist investment management for charities, faith organisations, and local authorities said in the FT recently, “The probability that you will get a decent return over a rolling 15 years from equities or real estate is reasonably assured. The expectation that you will definitely get an adequate return from a skillful manager over a 15-year view has to be zero because skill by definition has to be a zero sum game.”
In other words, many investors are paying for skill based managers when there is no added value above what the market gives in any case.
We know that when investors find out that such statements are true and are not dismissed as simply opinion, especially as independent research confirms these views, the solutions become self evident.
Our role is to help you recognise how important this research is to your future wealth, you can then make informed decisions about how you want your assets managed. If you decide to continue with your existing managers, you can do so for positive reasons rather than by default and historical reasons.
Want to know about how we review portfolios...take a look. Download our document “We have been able to improve every portfolio we have reviewed. What are you waiting for?”
Categories: Asset Class Management, Risk
posted by Murray Round Wealth Management @ 22:34,
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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