Why we recommend clients diversify their assets
Monday 11 October, 2021
Tracy Dove, financial adviser in Basildon, Essex and Hertfordshire, reviews how you can choose to allocate your investments, and which products are available to you.
Remember if you want to diversify your assets, we recommend you contact your Thomas Oliver financial adviser. We offer a free no obligation investment consultation. Please call us on 01707 872000 for more information.
The benefits of a diversified portfolio
We often write articles recommending the benefits of having a mix of assets and diversifying your asset allocation. When our financial advisers offer financial planning advice, we recommend that your portfolio is blended as different types of investments are more likely to deliver better (and smoother) returns over the long term. That’s because at any one time, assets can behave differently with some rising in value and potentially offsetting other assets that are falling in price.
For instance, within global stock markets, some regions perform better than others over certain periods, and this is the same with sectors, as the pandemic has highlighted. For example, companies that benefited from the stay-at-home economy, such as online entertainment and takeaway deliveries, outperformed sectors that suffered from a fall in demand, like airlines and hospitality.
Different asset classes can also move in different directions at any one time too. For example, when equity markets are rising, government bonds are often falling in value. However, this is not always the case, which is why it can help to add exposure to uncorrelated asset classes, such as ’alternatives’ – including property for example.
Some asset classes – like cash and bonds have more ‘defensive’ characteristics, whilst equities – which carry more risk – can offer greater growth potential for your portfolio. Ultimately, you should look to have ‘balance’, providing scope for out-performance, whatever the prevailing financial backdrop.
Building a diversified portfolio
Building diversified portfolios is complicated. It requires the right skills and is best left to a professional team of investors. Having an experienced team handling a fund can help ensure it performs to the best of its ability, without being exposed to unwanted risk. There are lots of ways to invest in a multi-asset portfolio. Here are some of the options available to you.
A managed fund
The most straightforward way is through a collective investment fund, for example the Omnis Managed Funds. Your Thomas Oliver financial adviser will meet with you to discuss your appetite for risk and other factors like your time horizon, to pick a fund that’s right for you and can meet your objectives.
A diversified portfolio
Another way of investing in a diversified portfolio is by combining funds investing in different asset classes. At Omnis, we offer funds that cover many different asset classes and regional exposures. The Openwork Graphene Portfolios are a series of six advised portfolios with varying degrees of risk. Your financial adviser will work with you to assess the best portfolio for you and these are designed to automatically rebalance to the original mix of asset classes every six months so that the portfolio always meets your risk profile.
A flexible portfolio
You can also access a well-diversified portfolio by investing in the Omnis Managed Portfolio Service (OMPS). OMPS is a discretionary portfolio investing in a wide variety of asset classes through the Omnis funds, in a similar way to the Graphene portfolios. Within OMPS, the investment team can increase or decrease the allocations to certain asset classes in line with market conditions, but always staying true to your risk profile. This helps optimise the portfolios with the aim of delivering better returns and/or reduced volatility in periods of market uncertainty.
Tracy Dove, financial consultant in Exeter, Devon, Basildon said:
‘The pandemic showed how important it is to continually diversify your assets as different types of investments and sectors performed differently over the period. By reviewing your finances with a qualified financial adviser, we can understand your financial goals, assess your risk profile and then recommend the products or portfolios that would suit you best. By investing through one of our financial advisers you will have peace of mind that we are always managing your portfolios and diversifying them on your behalf. You will receive regular updates and annual reports to show how the investment team are performing and adding to your investments through flexibly managing the mix of asset classes in the portfolios. Our financial advisers in North London offer a free initial consultation. Call us now on 01707 872000 for personalised local financial advice.’
Take financial advice to make sure you always diversify your assets and protect your wealth.
Please note: The value of your investment can fall as well as rise and is not guaranteed.