INVESTMENTS & PENSIONS
THE IMPORTANCE OF DIVERSIFICATION
Having a diversified portfolio is important for several reasons :
1 . Diversification helps to spread risk across different asset classes , industries , and geographic regions and ( often overlooked ) investment styles . Through investing in a diverse array of assets and styles , investors can mitigate the impact of underperformance or significant downturns in a particular sector , safeguarding the overall value of the portfolio and minimising the risk of permanent loss .
2 . A diversified portfolio can help investors capture opportunities for growth in different market conditions . Different asset classes and styles may perform well under varying economic environments , so having a mix can help investors benefit from market trends and mitigate the impact of volatility .
3 . Diversification can also help investors achieve a more stable and consistent return over time . By spreading investments with styles and risk , investors can potentially achieve a more balanced risk-return profile for their portfolio . This can help to smooth out fluctuations in returns and provide a more predictable outcome over the long term .
GOAL PLANNING
This combination of styles and assets can also help investors align their portfolio with their investment goals and risk tolerance . By diversifying across different asset classes , advisers can tailor portfolios to meet client-specific financial objectives , while managing risk in a way that is suitable for the individual client circumstances .
INVESTING WITH AN OUTCOME IN MIND
Utilising a wide range of styles and assets within a diversified portfolio approach aligns well the fundamental philosophy of outcome-based investing .
Outcome-based investing is a positive approach for clients , shifting the focus from the pursuit of chasing returns to aligning investment decisions with specific financial goals and objectives . Defining clear outcomes or targets , such as retirement savings or wealth preservation , helps advisers personalise investment strategies tailored to a client ’ s circumstance , risk tolerance and time horizon .
Anchoring investment decisions to specific outcomes , fosters a long-term focus and avoids making impulsive decisions based on short-term market fluctuations or emotional reactions . With trusted advice , investors can maintain a disciplined and strategic approach to investing which can ultimately lead to more consistent and successful results over time .
Furthermore , outcome-based investing facilitates a framework for measurement and tracking towards agreed-upon goals and targets . Through regular reviews and portfolio adjustments based on the progress towards these outcomes , investors can remain on track and make informed decisions that are in line with financial aspirations .
PUTTING “ MOMENTUM ” IN YOUR APPROACH
For over a decade Momentum has blended investment styles and assets in a truly diversified approach .
With a highly resourced team steering the combination of styles and assets , the Momentum Managed Portfolio Service follows an outcome-based approach with clear investment goals over defined timeframes .
CLICK HERE TO FIND OUT HOW TO PUT MOMENTUM IN YOUR PORTFOLIOS
Important Notes . This document is only intended for use by the original recipient , either a Momentum Global Investment Management Limited ( MGIM ) client or prospective client and does not constitute investment advice or an offer or solicitation to buy or sell . This document is not intended for use or distribution by any person in any jurisdiction in which it is not authorised or permitted , or to anyone who would be an unlawful recipient . The original recipient is solely responsible for any actions in further distributing this document , and in doing so should be satisfied that there is no breach of local legislation or regulation . This document should not be reproduced or distributed except via original recipients acting as professional intermediaries . This document is not for distribution in the United States .
Any opinions expressed herein are those at the date this document is issued . Data , models , and other statistics are sourced from our own records , unless otherwise stated . We believe that the information contained is from reliable sources , but we do not guarantee the relevance , accuracy , or completeness thereof . Unless otherwise provided under UK law , MGIM does not accept liability for irrelevant , inaccurate , or incomplete information contained , or for the correctness of opinions expressed . Past performance is not generally indicative of future performance .
MGIM ( Company Registration No . 3733094 ) is authorised and regulated by the Financial Conduct Authority in the United Kingdom and has its registered office at The Rex Building , 62 Queen Street , London EC4R 1EB . © MGIM 2024 .
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