Portfolio Construction
It is of paramount importance that Premier Partners conducts a thorough and objective assessment of our clients' circumstances, objectives and tolerance to risk exposure. Only then can we devise a fit-for-purpose investment portfolio that ensures they stand the best chance of achieving their investment goals whilst, simultaneously, adhering to the risk tolerances established at inception.
 | The key to the long-term investment success of a portfolio is having an appropriate asset allocation/diversification strategy in place. Seems obvious? Of course it does, but it is something that both investors and investment advisers have neglected in the past. Indeed, on many occasions, clients have come to us possessed of portfolios comprised of nigh on 100% investment in the stock of one particular corporation or holdings of one commodity. Superficially, asset allocation may sound very similar to diversification and indeed, the principles are closely related; both are designed to reduce risk in your portfolio. |
At its most basic, diversification means spreading money among several different investments and diversifying into a variety of alternatives, it is possible to mitigate the chances of suffering a catastrophic loss should one of the investments perform poorly.
Asset allocation takes this principle one step further by diversifying your portfolio not just among different investments, but among different investment classes: stocks, fixed income alternatives such as bonds, cash equivalents and real estate as well as other tangible assets.
Premier Partners has no reason to shroud the matter of risk in a cloak of industry terminology, depict it as some form of black art or to dismiss it as an issue that only affects our rivals.
 | Every investment involves some level of risk. Even CDs – traditionally considered “secure” because, unlike other investment securities, they offer a fixed rate of return and are insured – carry the risk that the rate of return received may not be enough to outpace inflation and taxes. Given that some degree of investment risk is unavoidable, your goal should be to maintain, and ultimately increase, your investment returns while prudently managing the risks. Asset allocation does not eliminate risk, but it can reduce your exposure to extreme highs and lows in performance. Effective asset allocation can also help preserve capital, increase liquidity and decrease portfolio volatility. |