Excellent Performance with contained risk

One of the major cornerstones of asset management is diversification. This is because it is considered a key investment strategy for helping preserve wealth by diversifying across different asset classes (equities, government bonds, corporate bonds, property, cash etc) as well as across geographical regions.

This approach helps to manage and mitigate the risk of any one investment type underperforming over time, ensuring you are not over exposed to any given asset type, country, sector or stock. At the same time the aim is to provide the highest potential return for your acceptable level of risk.

In our Investment Research Report issued last week, we provided an in dept analysis about the asset allocation and investment strategies we have selected.

How are the strategies performing?

The Cautious strategy is currently generating an annualised return of 7.6% (over a 5-year period), 6% (over a 3-year period) and 4% (over 1-year period). When compared to the benchmark, the strategy is overperforming in all of these periods by around 5% (see below chart)

The Balanced strategy is currently generating an annualised return of 9.1% (over a 5-year period), 7.6% (over a 3-year period) and 7% (over 1-year period). When compared to the benchmark, the strategy is overperforming in all of these periods by around 6% (see below chart)

The Dynamic strategy is currently generating an annualised return of 11.4% (over a 5-year period), 9.4% (over a 3-year period) and 10.5% (over 1-year period). When compared to the benchmark, the strategy is overperforming in all of these periods by around 5%-8% (see below chart).

Equity markets have been very strong over the last couple of years. If we compare Global Equity indices against our Dynamic strategy, which is the most heavily exposed to this asset class, we notice that the strategy is also overperforming against a Global Equity blended index. This is achieved due to the optimal weighting into each asset class and the selection of the best breed of investment funds and ETFs. (see below chart for more information).

If you want to receive an in-dept analysis about these strategies please click here to know more  on our Investment Research Report.

If you would like us to provide you with a tailor made investment advice based on your particular needs and financial circumstances, please click here.

 

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Benchmark definitions

EUR Cautious Allocation – Global funds have a mandate to invest globally in a range of asset types for an EUR-based investor. The equity component does not exceed 35% in the normal running of the fund. Morningstar Category Index: 75% Barclays Euro Agg Bond TR & 25% FTSE World TR.

EUR Moderate Allocation – Global funds have a mandate to invest globally in a range of asset types for an EUR-based investor. The equity component will usually be between 35% & 65% in the normal running of the fund. Morningstar Category Index: 50% Barclays Euro Agg Bond TR & 50% FTSE World TR

EUR Aggressive Allocation – Global funds have a mandate to invest globally in a range of asset types for an EUR-based investor. The equity component will usually exceed 65% in the normal running of the fund. Morningstar Category Index: 25% Barclays Euro Agg Bond TR & 75% FTSE World TR

Global Large-Cap Blend Equity funds invest principally in the equities of large-cap companies from around the globe. Most of these funds divide their assets among many developed markets and invest at least 20% of equity assets in North America and 15% in Greater Europe. Equities in the top 70% of the capitalisation of each of the seven regional Morningstar style zones are defined as large-cap (the style zones are Europe, US, Canada, Latin America, Japan, Asia ex-Japan, and Australia/New Zealand. Morningstar Category Index: MSCI World NR

Source: Morningstar. Returns quoted are in EUR, total returns and net of fund fees.

Past performance is not a guide to future results. This information is based on current public information that is considered reliable and is being provided solely for information purposes and should not be deemed or construed as investment advice, , tax advice or legal advice. Similarly, any views or opinions expressed are not intended and should not be construed as investment, tax and/or legal recommendations or advice. The information, opinions, estimates and forecasts contained herein are as of the date hereof and are subject to change. Currency fluctuations may affect the value of certain investments and any derived income.  ELP Finance Limited accepts no liability whatsoever for any loss or damage incurred by users in their trading which may arise directly or indirectly from the use of, or reliance on such information.  No person should act upon any opinion and/or information in this document without first obtaining professional advice.

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