Asset Allocation

One of the most important steps in constructing an investment portfolio is allocating the money to the different areas: UK equities, foreign equities, fixed interest, commercial property, cash etc. Studies have concluded that up 90 per cent of investment returns were derived from asset allocation, where stock selection and market timing accounted for only 10 per cent*.

*Source: Ibbotson Associates Study 2000.

This is not simply a question of diversification; although spreading risk amongst different asset classes is clearly important. The proper split between these asset classes depends on your personal aims and on the levels of risk that you are comfortable with over your chosen timescale.

Here, modern technology can help to keep the cost down considerably. Many advisers and wealth managers charge a high fee to construct these portfolios for you. At Chandos Rose we use a range of sophisticated computer packages to match the asset spread as closely as possible to your time scale and your risk tolerance and produce model portfolios – these we provide at no extra cost to investors.

As an example only, model portfolios might be constructed to meet the following circumstances: