Research has demonstrated
that asset allocation accounts for approximately 90% of the
variation in investment returns. This means that asset allocation
alone is nearly ten times as important as stock selection
and market timing combined in determining the performance
of a portfolio. So how can the optimum asset mix be achieved
more cost effectively through active fund management?*
Active
fund management is arguably the most sophisticated method
of asset allocating and is appropriate for those investing
in collectives such as Unit Trusts, OIECS, ISA’s,
PEP’s and Pensions.
There are many advantages in opting for
active fund management. The ability to
respond immediately to changing market conditions, acting
speedily to ensure changes and switches to a client's portfolio
are swift. In addition Asset allocation of the portfolio
is constructed and managed specifically according to the
investor’s
objectives, timeframe for investment and attitude to investment
risk. Using KPM you get all of these advantages and none
of the charges which are prevalent with others.
Why active management?
Management of investments can
seem daunting and time consuming to some. Active fund
management is, therefore, of appeal to all levels of investors,
for those looking at their investments for the first time
and investors looking for active management of their funds
with the potential to add value. By appointing
KPM a personal, relationship-driven service geared
to the financial objectives of the investor can be established.
This, together with a flexible approach and emphasis on getting
to ‘know
the client’, means that investment options can be
directed by these objectives.
Tailored approach – the
benefits
Understanding the needs of the investor
and building a good relationship is important so that the
investment portfolio can be managed efficiently and effectively.
An initial meeting with the investor and KPM is essential
so that the fund manager can fully understand their requirements
and determine a suitable risk profile. As a result of this,
an investment strategy can be agreed and work can then begin
on the construction of a portfolio specifically designed
for the investor. KPM can take over the responsibility for
the day to day monitoring of all your investments in Pension
funds, responding to fluctuating investment market conditions
and any change to the client’s own circumstances. By
adopting a diversified approach within the investment portfolio,
a degree of flexibility will be maintained which will make
it easier to absorb any alterations as required.
If you would like to consider how
this or one of the other asset allocation models can be incorporated
into your financial planning then please contact your usual
contact at KPM Financial Planning Ltd Investment Management.
* As shown in studies such as "Modern Portfolio
Theory," Harry Markowitz and "Determinants of Portfolio Performance
II : An update, " Brinson, Singer & Beebower (1991).
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