Discretionary Fund Management Portfolio Planning

What is portfolio planning? Simply put it is taking your net wealth in cash terms and spreading the investment style, risk and sectors into a diversified range (portfolio). This allows individual funds that in isolation would not appear attractive to be included in the overall investment which can have a beneficial effect on the net value of the fund.

A cautious investor seeking reasonable medium term returns would probably hold significant low risk funds, but also a modest amount in Far East, Emerging Markets or even Commodities (e.g. Gold or Energy) funds. The overall portfolio should match individual circumstances & objectives and be reviewed to maintain the match, but true diversity of asset allocation is important to every portfolio.

Different elements of a portfolio may be invested for different terms with different risk profiles as appropriate. Equity ISAs for extra retirement funding - invested for 10 years+ before retirement, and a lifetime for income thereafter; could have more adventurous asset allocation than funds for income in a year’s time with capital access at short notice, which would need to avoid volatility and be more cautiously invested. A portfolio approach allows for this.

We believe the overall portfolio should be linked to a risk profile, which also gives a suitable benchmark for future comparison, then be subject to regular review. Where individual elements of a portfolio have identifiable objectives, a separate profile and benchmark may also be worthwhile.