A moving feast - the gentle art of portfolio management
We have recently completed an analysis of whether the recommendations we make for clients who have their investment portfolios managed here are effective. We looked at what would have happened over the last five years using various scenarios:
1. Using indices rather than specific products for each type of investment. For example, using the NZSE 40 Gross index for New Zealand shares instead of the specific funds we prefer.
2. Whether using indices or specific investment products and not re-balancing the portfolios when they get ‘out of kilter’. If you establish a particular mix of investments, in time, the proportions in the mix will vary from the ratios you think are appropriate. Re-balancing is needed to bring the mix back into line.
3. Again, for indices or our own particular product recommendations, not changing the asset allocation. There are times when it is necessary to change the preferred mix for particular economic conditions.
We found that the best results occurred when:
1. We make specific product recommendations.
2. We re-balance at least annually.
3. We vary the asset allocation in response to economic conditions.
If you have over NZ$350,000 to invest and want truly impartial advice, contact us to find out how we can put your money to work to fund your important goals.
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