Asset Allocation

Asset allocation 

Asset allocation is arguably the most important aspect to take into consideration with regards to portfolio management, reaching the desired goals for the portfolio and accommodating the investment horizon of the portfolio.

It has been long argued that a diversified portfolio is the best portfolio to mitigate the risk of market downturns and maximise the return capability of a portfolio. Although a well diversified portfolio is important and has proven to be a very profitable long-term plan to follow, one must also consider the fact that you could be losing out on potential earnings by having an over diversified portfolio.

Think about your investment horizon and future earnings

Of course, when you are younger and still in the fairly early stages of your working career, you can afford to take more risks as your responsibilities are most likely much more accommodative than it will be ten years from now. This is something that should be taken full advantage of as this window will be closing as you get older and have more responsibilities down the road. 

Let’s use an example, when you are still young, investment opportunities that have a higher risk premium (higher reward for taking higher risk) will be more attractive than assets which have a long standing history of stable and reliable returns. This will most likely be more attractive for a person who is in a relatively early stage of their investment horizon as opposed to someone who is in the latter half of their investment horizon.

Firstly, when you are younger you are looking to build your wealth and provide for future income needs. Your risk appetite is generally higher as you strive for opportunities that will reward you for firstly taking the risk of investing and secondly opportunities that will help you with your short- to medium-term financial goals. This does not mean that diversification is not important, however diversification is a form of wealth management rather than wealth creation, meaning that diversification becomes all the more important as you go along your investment time horizon as you would like to diversify some of the returns that you have made and still earn a yield on those investments, however capital preservation becomes more important as the time one has left to take risk becomes shorter as one gets older.

To find out how to best diversify your portfolio according to your needs, feel free to visit our website and book a free consultation with our team of highly experienced advisors and portfolio managers.

 Who are we? 

Caveat Capital Management is a strategic advisory firm based in Cape Town. Caveat Capital Management specializes in structuring tailor-made investment portfolios that serve your needs now and grow with you as your needs change. Caveat works to maximize your gains and minimize the risk.

What we offer

Caveat Capital Management has a competitive fee structure that incentivizes the portfolio manager to perform and the remuneration is highly linked to the performance of the portfolio. Caveat Capital MGMT (Pty) Ltd is a CATII – Authorized Financial Services Provider (FSP no. 24777) registered at the South African Financial Services Conduct Authority (FSCA). Meaning that we have the required licensing to structure full-discretionary portfolios structured to your needs.  

Disclaimer

This report does not guarantee the suitability or potential value of any information or particular investment source. The information provided is not intended to, nor does it constitute financial, tax, legal, investment or other advice. Before making any decision or taking any action regarding your finances, you should consult a qualified financial adviser. Nothing contained in this publication constitutes a solicitation, recommendation, endorsement or offer by Caveat Capital Management, but is merely an invitation to do business.

Information and content

The information in and content of this publication are provided by Caveat Capital Management as general information about the company and its products and services. Caveat Capital Management does not guarantee the suitability or potential value of any information or particular investment source. The information provided is not intended to, nor does it constitute financial, tax, legal, investment or other advice. Before making any decision or taking any action regarding your finances, you should consult a qualified financial adviser. Nothing contained in this publication constitutes a solicitation, recommendation, endorsement or offer by Caveat Capital Management, but is merely an invitation to do business.

Caveat Capital Management has taken and will continue to take care that all information provided, in so far as this is under its control, is true and correct. However, Caveat Capital Management shall not be responsible for and therefore disclaims any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered as a result of or which may be attributable, directly or indirectly, to the use of or reliance upon any information provided. Past performance is not an indication of future performance. Caveat Capital Management does not provide any guarantee regarding capital or performance.

Caveat Capital MGMT (Pty) Ltd is a CATII – Authorized Financial Services Provider (FSP no. 24777) registered at the South African Financial Services Conduct Authority (FSCA).