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Investment Q1 2016

Wealth Works Authorised Financial Adviser David Angus provides a brief market update plus covers Asset Allocation basics. 


The share market generally ended 2015 on a positive note however in early January the markets took a downward slide. We saw the market bottom out around the middle of February and fortunately the markets have now regained their lost ground.

Some investors we greatly affected by this fluctuation and others, although certainly noticed a fluctuation did not experience it to the same degree. Why is this? A lot of this is to do with the asset allocation within your own personal investment portfolio.

Shares and property for example, can be expected to see higher volumes of volatility while fixed interest and cash will provide a more steady return.  Here’s how Asset Allocation works.

What is it?

A fund that holds more than one asset class is a multiple asset allocation fund. This portfolio can consist of traditional assets such as cash, bonds, property and shares. When we talk about asset class we are not talking about individual securities.

An asset allocation is based on the principle that different asset classes perform differently in different market and economic conditions. Share markets often perform well when interest rates are low and vice versa.

The purpose of asset allocation is to build a diversified portfolio of assets to minimise risk. Ever heard the old saying “Never put all your eggs in one basket” this is the same.  Investors allocate their assets differently according to their risk tolerance and their financial needs in the future. A retired person may allocate their assets in more fixed income securities so that they have income to live off; while a young working individual may have a higher proportion of their assets in growth stocks like shares.

The amount you allocate in each asset class is up to you.

What is the right mix for me?

The primary goal of a strategic asset allocation is to create an asset mix that will provide the optimal balance between expected risk and return over your investment horizon.

To find out what asset allocation is right for you, speak to your financial adviser.

What asset allocation is right for you? 
Speak to an Authorised Adviser today 09 306 5820
David Angus | 

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