Planning Process / Asset Allocation
Asset Allocation
We'd all like a piece of a raging bull market but without perfect foresight or a lot of luck, most of us find it very difficult to get the right timing.
Investors have a clever knack of getting into the market just as it reaches the top, and getting out somewhere around the bottom!
Experience since 1980 seems to validate this theory with the best performers over the period being:
| Investments | Returns |
Rank |
| Overseas Shares | 19.1% | 1 |
| Aust Shares | 17.4% | 2 |
| Overseas Fixed Interest | 16.4% | 3 |
| Listed Property | 15.1% |
4 |
| Aust. Fixed Interest | 13.0% | 5 |
| Cash | 11.3% | 6 |
So what does all this mean for investors? It means choosing a mix of assets that reflects both your investment time horizon and your willingness to accept fluctuating returns.
Investment Diversification
By placing your money in a number of asset classes, the good returns you receive from one investment can offset the poor performance of another.
Diversification can offer enhanced security, potential for improved returns and decreased volatility.
Master Funds
Master Fund investment give you access to trained investment specialists who constantly research and monitor the investment markets to determine the best possible investment opportunities.
Master Fund investments help you diversify in many ways:
- Spread your money between shares, property, fixed interest and cash.
- Investment in different investment's within the same asset.
- Access to investments in many countries across the world.
- Spread your money between different fund managers so that you can benefit from different investment styles.
- Manage Funds so that you can benefit from different investment styles
- Handle all the paperwork and administration
- Provide you with regular information on the fund's performance
- Provide annual tax statements and tax guides.
Most managed investments are structured as unit trusts. When you invest, you are allocated a number of units based on the amount you invest and the current unit price.The unit price reflects the value of the fund's investments.
Benefits of managed investments include:
- Access to a choice of investment options.
- Diversification across investment sectors.
- Professional funds management.
- Ease of portfolio management
- Clear reporting and regular statements
- Consolidation of cashflow.
- Ability to reinvest or take nominated amounts of regular income from your investments.
Asset Class Performance
The following chart provides an indication of the returns and the relativity between the different asset classes.
The are many and numerous factors that may contribute to the performance of an investment. Past performance should not be used as the sole indicator for future performance
