It has been an interesting year so far and we are heading in to the final furlong with a number of key investment issues coming to a head that will affect your asset allocation decisions:

• Is the Longer term Bull market in bonds and fixed interest over?; or

• Will the equity rally become the focus of investor attention?

Among all of the market analysis by each of the players how is the adviser to manage their asset allocation strategy on behalf of their clients?

The answer can only be, very carefully……..

Managers Warn over Advisers’ Asset Allocation Dilemma

This article appearing in FT Adviser only goes to show that canvassing opinion does not necessarily help the situation. Beyond all of the jargon there are the layers of assumptions and sound bites regarding asset allocation.

We have government bonds in “bubble territory”, equities in a “reluctant rally” while they have “slightly overshot an earnings recovery” with defensive areas “priced for perfection”. What does that actually mean? At the same time Emerging markets have “some catch up potential”.

As market professionals we find the subjective application of catchphrases and assumptions difficult to mine for meaningful information, so we don’t. Faced with all of the conflicting views, if they are indeed conflicting, it is probably tempting to hold your hands up and concede defeat. Why don’t you just sit still and let the markets sort it all out?

This may be, if not effective, an acceptable strategy for a large part of your client portfolio but what are you going to do for the clients that you need to steer through critical phases of their life as they prepare for realisation of assets in the next few years.

Given that among these clients there are many that are likely to spend nearly thirty years in retirement they cannot necessarily afford to sit on low risk / return assets.

Getting Your Sector Allocation Right

More than anything else focussing your clients’ money on the correct asset classes and industry sectors can contribute significantly to the successful growth of their portfolio.

We will continue to suggest that it is increasingly important to develop your asset allocation process with the aim of reducing the risk that you accept in diversifying your clients’ asset exposure. However unappealing it is to the average decision maker this does mean considering the timing of your asset allocation.

Decision making, risk management and ultimately compliance reporting are all interlinked responsibilities when considering your clients interests. Accordingly, you need to underpin your asset allocation process with consistency and objectivity in order to execute your client service.

With all of the subjective commentary and varying degrees of assumptions made by investment managers it is important that your asset allocation process contains a continuous reference point.

Our analysis is designed to do this for you. Filling the gap between your investment manager reports and their specific view of markets and opportunities we are able to provide a barometer across asset classes, markets and sectors that allow you to manage your asset allocation dilemma.

Learn more

Fig 1,2,3 below show an extract from Our Asset allocation Model from our Qlikview dashboard for Week 44. Each week we apply the same maths to achieve the same objective and more imortantly for your understanding we provide the same description.
























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Keith Reid
Keith Reid
Keith’s training as an accountant and auditor has emphasized the importance of evidence in all good decision making process. The ability to monitor management processes effectively is a key to making the most of business opportunities. Both Keith and Gerry believe that this priority for capital preservation is the common principle that sets the framework for any sound investment strategy or business model.