Asset allocation

Reaching your goals

20/10/2016

Henry Johnstone

Henry Johnstone

Assistant Portfolio Manager

With the 2016/2017 English Premier League season taking shape, it seems there are striking similarities between portfolio construction and selecting the ever important fantasy football team.

From a ‘top down’ perspective, the traditional stalwarts within client portfolios – equities and fixed income – are akin to players from the ‘Big Four’: Manchester United, Manchester City, Chelsea and Arsenal (cue disgruntled Spurs and Liverpool fans).

Although these popular asset classes remain the foundation upon which to build a portfolio, there is an increasing necessity to diversify into alternatives such as absolute return funds, structured products and infrastructure in a bid to spread risk, dampen volatility and reduce reliance upon returns from generic equities and bonds.

In a similar vein, the Big Four’s dominance is being challenged by clubs such as Spurs, Liverpool and Everton who are threatening to break the cycle at the top of the league. In 2015 for example, a team full of misfiring Manchester United and Chelsea players would have significantly struggled, as would a client portfolio full of UK Financials and Oil stocks. The point being that both successful portfolios and successful fantasy XIs look to achieve a well diversified blend of ‘holdings’ with complimentary characteristics in order to outperform peers across any time period.

Once the composition of the portfolio or team is decided upon it is paramount that you have faith in the strategy and do not make too many changes. By all means monitor waning positions and if underperformance persists then necessary alterations must be made. Nevertheless, keep in mind that the most effective portfolios and fantasy teams are those that stick to their process and stay in the game for the long haul!

Author

Henry Johnstone

Henry Johnstone

Assistant Portfolio Manager

Henry Johnstone is an Assistant Portfolio Manager on the DFM team. Prior to joining Cazenove Capital he worked at RBC Wealth Management as part of their graduate program. He graduated from Durham University with a BA(Hons) in Geography and also holds the Investment Advice Diploma and Private Client Investment Advice and Management certificate. He is now working towards CISI’s Masters in Wealth Management. 

This article is issued by Cazenove Capital which is part of the Schroder Group and a trading name of Schroder & Co. Limited, 12 Moorgate, London, EC2R 6DA. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested. This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements. All data contained within this document is sourced from Cazenove Capital unless otherwise stated.

Contact Cazenove Capital

To discuss your DFM requirements, or to find out more about our services and how we can help you, please contact:

Nick Georgiadis

Nick Georgiadis

Head of DFM Team nick.georgiadis@cazenovecapital.com
Simon Cooper

Simon Cooper

Business Development Director simon.cooper@cazenovecapital.com