Please note: this article is more than one year old. The views of our CIO team may have changed since it was published, and the data on which it was based may have been revised.
Our robust ESG focused approach to strategic asset allocation can help you mitigate the adverse effects of volatility and build your core portfolio over the long term, with the option of advanced risk management features.
To give yourself the best chance of achieving your investment goals, using strategic asset allocation to find the right mix of asset classes is essential. Effective asset allocation strategies are those that take enough risk to give your portfolio the potential to grow, but not so much that you feel uncomfortable – and therefore more likely to withdraw funds at the wrong moment.
Getting this balance right, and maintaining it for the long term, can be costly and complex. This is why our approach to strategic asset allocation is designed to maintain your core portfolio as efficiently as possible.
Robustness: why our approach to strategic asset allocation is different
The classical approach to strategic asset allocation relies on forecasting the returns and volatility expected from each asset class, and how the price of each asset class is expected to move in relation to the others. A calculation is then made about which combinations of asset classes have the highest potential for a given level of risk.
The issue with this approach is that the parameters may not behave as forecasted.
We believe it is necessary to go one step further, and to factor in the level of uncertainty that can be applied to each parameter of each forecast. By doing this, we are able to build portfolios that are more robust.
This means:
- Portfolios that are less sensitive to adverse market conditions;
- Avoidance of the additional costs required to adjust portfolios that rely on more uncertain forecasts; and
- Higher potential for growth over the long term within a given level of risk.
How to take advantage of our robust strategic asset allocation approach
Our Discretionary Portfolios can take advantage of our robust strategic asset allocation approach. Our SAA offering provides a simple and cost-effective way to implement the long-term investment strategy of our CIO team, with the option of systematic risk-hedging.*
For further information about our strategic asset allocation investing approach and how it could help you, please speak with your Relationship Manager or get in touch.
*Not all products and services are offered in all jurisdictions and availability is subject to local regulatory restrictions and requirements. To find out details of minimum requirements, please speak to your relationship manager or get in touch.
