A new tool for financial advisers produced by research house van Eyk has found many model portfolios are vulnerable to risks and not set up to meet objectives.
The Portfolio X-Rays service, launched by van Eyk in October 2012, examines the investment outlook, risk tolerance and performance objectives of a model portfolio so advisers can assess its value for clients.
Jonathan Ramsay, head of asset consulting at van Eyk, said the ‘x-rays’ completed so far reveal some important intelligence.
“The results show that most portfolios require at least some adjustments and that it’s possible to reduce the level of risk without giving up performance or radically changing asset allocation,” he said.
“There was also a significant issue with alternative investments,” he added. “Although we are firm believers in using alternatives to reduce volatility and manage risks, some assets considered to be in the alternatives sector don’t offer the diversification and low correlation to traditional assets that investors want.”
Specifically, the research found that many model portfolios are “vulnerable to profound or sudden markets shifts, such as an end to the rally in bond markets or a breakout in inflation” and that “some portfolios had an unintended bias to particular market sectors or a certain investment style.”
ART strongly believes that for the new class of financial advisers to be successfully implemented, consumer safety must ...
The “sandwich generation” is under mounting financial pressure, driving increased reliance on financial advisers who now ...
HUB24 has reported a 17 per cent quarterly rise in the number of advisers using its platform. In the three months to ...
Never miss the stories that impact the industry.
Get the latest news! Subscribe to the ifa bulletin