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Portfolio Composition

Portfolio Composition

Most portfolios comprise of assets from some, or all, of the following classes:

      • Cash Money Market
      • Fixed Income (Developed and Emerging Markets)
      • Developed Equity Markets
      • Emerging Equity Markets
      • Alternatives

Cash

Simple cash account in the chosen currency, interest bearing when available. Alternatively, a Money-Market fund that achieves slightly higher interest rates. Cash is a very important component to provide liquidity for emergencies or to take advantage of buying opportunities.

Fixed lncome

This usually refers to the Bond market rather than fixed interest bank accounts. Bonds range in risk-rating from Sovereign, Municipal and Corporate thru Emerging Markets and Junk (below investment grade or BB rating). Risk assessment mostly driven by credit rating of the bond in question. We would normally use funds in this space except for quite large portfolios where we can buy individual bonds.

Developed equity markets

Basically the MSCI World Equity Index. A massive range of options open to you here, from single equity positions through the various equity indices, funds, ETF’s, CEF’s and much more.

Emerging equity markets

The rest of the world’s equity markets; usually covering the BRIC’s (Brazil, India, Russia, China) through Latin America and Asia. Also Frontier Markets of Africa, Pakistan, Turkey, Middle East and other newly emerging economies.

Alternatives

The rest of the investment universe. From metals to hedge funds to private equity to derivatives and anything that is not covered in the main asset classes. Probably the most specialised area and the biggest minefield. Not for the inexperienced investor.