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.”
Stimulate new ideas. Stimulate new thinking. Top up your CPD points and hear from industry experts with ifa’s Knowledge Centre. Keep up to date with the latest trends and reforms, all while adding to your CPD hours. Explore the Knowledge Centre now.
The acting AFA chief executive has come out swinging in the defence of financial advisers. ...
AFCA has confirmed it will not appeal the Supreme Court’s decision that it had acted against its obligations in January. ...
Financial advisers who engaged in mediation with AMP after being terminated by the wealth giant over the past two years have been left “dissatisfie...