Asset allocation – helping your portfolio perform

How Citi IPB can provide a diversified investment strategy designed around your needs.

The old saying about putting all your eggs in one basket remains true. It is easy to see why it pays to diversify, and spreading your money among different investments to reduce risk. Choosing a single stock could mean dramatic profits – but it is just as likely to produce dramatic losses.

There is actually clear evidence that a portfolio's performance is dependent on its diversification rather than the particular products it contains. But the truth is that simply holding a number of equities (for example) can still mean risk. As recent upheavals around the world have shown, entire asset sectors can fall together.

But there is a solution. The three main asset classes - equities, fixed-income, and cash and equivalents - have different levels of risk and return. By selecting assets from each class you can give your portfolio the diversity you want.

Asset allocation designed for you

If you are a seasoned investor, you may be familiar with the investment pyramid, with a basis of solid investments that offer low risk, and moderate, but predictable returns. This is followed by a middle sector of medium risk with potential for more exciting returns, and a top level of investments that are frankly speculative. This is made more complicated by the fact that your personal preference may be for a broad base, or you may prefer your pyramid to stretch far higher into the speculative regions.

Source: www.getsmarteraboutmoney.ca

And to make things more complicated still, your attitude to risk may change over time. You will probably be happier with more volatile holdings when you have many years to make up any losses, but prefer safe and steady investment when you are nearing retirement.

Planning an investment that fits your changing needs would involve balancing your own feelings about risk against your goals and objectives, researching individual securities and the market as a whole, and to have the ability to see developing trends. 

Your personal portfolio

We have a range of portfolio types that have been developed by our experts and which let us provide the blend of risk and potential which is right for you at any particular time.

By carefully selecting assets, these standard portfolios can cater for all kinds of investment needs. When you set out as an investor, for example, you will want long term capital growth, and will be happy to tolerate medium term volatility to enhance long term outcome.  You may have a greater appetite for risk, and prefer our advanced growth portfolio, which may carry the risk of losses in the short term but should offer the maximum long term returns.

As years go by you may prefer to switch your investment to asset allocations designed to minimise the potential for loss. When the time comes to retire, you would probably prefer to switch to assets that offer income and capital preservation, or even to a completely risk adverse allocation which, as the name implies, is designed for savers who are unable to tolerate any losses in portfolio value.

Telling us what you are looking for

To help our experts plan the asset allocation that is right for you, we need first to understand your attitude to risk, and your current financial circumstances, resources and aims.

You may already have discussed your preferences with your Relationship Manager, but we believe that your needs change over time. That is why it is important to review your portfolio regularly to ensure that it is still in line with your risk profile and relevant to your financial objectives.

For advice on asset allocation or any other investment topic, please contact your Relationship Manager.