Diversification - the magic ingredient

clock
Alexis Gray of Vanguard
Image:

Alexis Gray of Vanguard

Many investors are tempted by tactical asset allocation - the practice of shifting a portfolio's weighting as the outlook chops and changes.

The reality is that it is hard to predict exactly how and when the market will react. To illustrate this point, let us look at a few scenarios. What will happen when the central bank responsible for a major reserve currency pushes up interest rates? Do you expect the value of long-dated bonds to rise or fall? Here's another scenario: a new president is elected to lead a large Western superpower, promising to cut taxes and increase public spending. A client calls, wishing to invest in that country's equities. More money flowing through the system will be good for business, she reaso...

To continue reading this article...

Join Investment Week

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on UK

The fall in sales volumes over the month was because of food stores, which fell by 1.6%.
UK

UK retail sales slip in May as consumer confidence falls to lowest on record

Shoppers cut back on food spending

clock 24 June 2022 • 2 min read
"UK is at a crossroads"
UK

Average global funds hold a third less in the UK than before Brexit

Brexit risks still an issue for managers

clock 23 June 2022 • 4 min read
The UK Infrastructure Bank just surpassed its one year anniversary
ESG

UK Infrastructure Bank to move away from investing through fund managers - reports

Chief executive has come under pressure

Elliot Gulliver-Needham
clock 23 June 2022 • 2 min read
Trustpilot