In this episode of "Wealth and Toil," hosts Luke Laretive and Dylan Pargiter-Green discuss the importance of asset allocation in investment portfolios, particularly focusing on international equities.
Asset allocation is crucial for balancing risk and return according to an investor's profile and goals. Key points include:
Discussion on Asset Allocation:
- Asset allocation involves diversifying investments across various asset classes to manage risk and potential returns.
- The discussion differentiates between growth (equities, listed property) and defensive assets (bonds), emphasising the role of asset allocation in achieving long-term financial goals.
- For younger investors, growth assets are preferred due to their potential for higher returns over a longer investment horizon.
- Proper diversification is highlighted as essential, not just in terms of quantity but in aligning with one’s risk profile and investment objectives.
Focus on International Equities:
- Many investors overlook the benefits and complexities of investing in international equities.
- Utilising a multi-manager approach to international investing, which can offer a diversified exposure to global markets and potentially higher returns.
- Challenges include different regulatory environments, language barriers, and the need for specialised knowledge.
- It's important to select managers with specific expertise in international markets and a proven track record of adapting to changing market conditions.
Case Study on Asset Allocation:
- Two fund managers specialising in emerging markets, comparing their strategies, holdings, and performance.
- One manager focuses on Asian markets with top holdings in sectors like technology and consumer goods, while the other has a broader emerging market focus, including investments in companies from India, Brazil, and the technology sector.
- Performance analysis shows the importance of not chasing short-term returns and the value of a strategic, long-term approach to asset allocation.
General Advice Warning: This podcast is intended and contains general information on financial strategies, investments, and products only. Whilst Luke and Dylan are both licenced Financial Advisors, we don’t know your personal circumstances, goals or objectives. We highly recommend that you reach out to your Financial Advisor or investment professional to discuss any of the topics we have covered today before taking action.
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https://www.boldwealth.com.au/
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