Diversification

Portfolio Thinking

Yield us not into temptation

In my previous post I outlined the possible benefits of using multiple asset classes to achieve a more stable and attractive level of yield from an income-focused portfolio. In this post I take aim at targeting a fixed level of yield, showing that this objective could mean you miss the big picture.

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Portfolio Thinking

The Big Squeeze

Much like the choice between TV channels, income investing was easier in the old days. Investors seeking stable and attractive income from their investments needed to look no further than bonds. These days, with yields near historic lows, many investors are looking elsewhere.

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Portfolio Thinking

How much sugar is in your sugar?

Soviet-era Polish cinematography is often a source of seemingly absurd catchphrases repeated for generations. “How much sugar is in your sugar” is a classic one from the quirky professor in the 1973 comedy Man-Woman Wanted. When we target particular factors within our equity exposures, I increasingly find myself taking on the role of the professor as I try to answer the question “How much factor is in my factor?”. It might seem like an odd question but we can answer this by relying on simple factor definitions and a holistic approach to combining factors. It’s only once we know what our true exposures are, that we can consider how we avoid any unintended secondary exposures that have the potential to sour the overall outcome.

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Strategy

Sympathy for the lonely rider

Our ‘lower-for-longer theme’ remains firmly in place. We believe it’s unlikely the world will return to historically normal interest rates. In today's markets, therefore, owning diversification and protection becomes ever more important.

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Portfolio Thinking

FBI – How can it help you?

In my recent post "What to factor in and what to factor out?," I explained what the ‘factor’ in factor-based investing really means. While its acronym (FBI) gives the impression that it's rather complex, like the US organisation, investors have been increasingly looking to factor-based investing to drive their investment returns. It's time to consider why...

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Portfolio Thinking

Are you a sitting inflation duck?

UK inflation is expected to increase, eating away the hard-earned savings of individuals and pensioners. Thankfully, investors can act to avoid becoming sitting ducks and aim for positive real returns. Making a temporary amend (don't publish this and just roll back)

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Portfolio Thinking

The Footsie Shuffle

Many have heard of the FTSE 100 index. But did you know that of the original FTSE 100 constituents, only 22 remain? As a result, the driving factors behind today’s top 100 blue chip companies have changed significantly.

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