Meet the mixologists:
An asset allocation masterclass
PICK 'N' MIX We asked respondents to share their asset allocations across their highest, lowest and medium-risk portfolios. How much should be allocated to cash has been a matter of debate over the last few months, and the topic came up again in our roundtable and sector articles. It was also interesting to look at allocations to property, given the recent gating of the M&G property fund. Property made up 2% of low-risk portfolios, but its inclusion at all is a point of debate. On page 20, FinaMetrica cofounder Paul Resnik talks about matching assets with liabilities. A portfolio holding property needs to be capable of doing all the heavy lifting if that asset becomes illiquid. Property made up 7% of medium-risk portfolios and 10% in the high-risk category in our adviser survey (see figure 2). We take a deep dive look at liquidity issues on page 36, which also includes an update on the property fund sector. Advisers were doused with the proverbial bucket of cold water as they watched Neil Woodford’s UK Equity fund shudder to a halt this year. But despite the subsequent barrage of criticism levelled at the manager, our roundtable advisers still lament his funds’ demise. They were happy to take a bet on the long-term, non-FTSE investments he made, and saw it as a ‘pure Brexit play’ that may well have come into its own as we move from the election to a 31 January deadline. (However, between the closure of the Equity Income fund in suspension in October and January 9th, the fund gained just 1.2%. Woodford Income Focus was up 3.3% in the same period, buoyed by a post-election stock market rally.) The most used vehicle was, unsurprisingly the model portfolio. Of course, these can often provide a jumping-off point for more bespoke solutions. This is the case with at least one of the firms in our roundtable discussion. We were able to see what those models looked like (see figure 3). As we enter a New Year, will we really see the back of the political uncertainty that has hung over the UK since May 2016? With a Brexit deal still to be thrashed out and the US presidential elections upon us, it seems unlikely.
Mixed assets still popular despite icy returns in 2010s
SECTOR ANALYSIS
By Frank Talbot Head of Investment Research, Citywire
Dynamic planner: Much is luck, so make sure client needs drive decisions
Director Chris Jones explains why data is useless unless advisers ask the right questions
interviews
By William Robins 13 Jan, 2020
‘I’m an asset liability matcher’
FinaMetrica cofounder Paul Resnik tackles liquidity, volatility and why risk aversion needs to be reframed
What advisers need to know about behavioural biases
William Robins spoke to Neil Bage, director of behavioural insight at Be-IQ, about spotting emotional biases and how that helps advisers build client portfolios
Why you can’t ignore geopolitics in 2020
Brexit, US elections and trade tensions have defined the global economy in the last few years. Thanos Papasavvas, CFA, founder and chief investment officer of ABP Invest, looks at how geopolitics will shape asset allocation this year
By Thanos Papasavvas, CFA Chief investment officer, ABP Invest, 13 Jan, 2020
Asset allocation roundtable
We asked advisers Andy Bracken, Andy Butcher and Steve Buttercase about their firms' investment choices.
As liquidity dries up, it’s time to wet the whistle
The M&G fund suspension and fall of Neil Woodford have advisers rushing to rethink portfolios
LIQUIDITY
By Jack Gilbert 13 Jan, 2020
How three firms are tackling the 2020s
Advice firms of vastly different sizes share their asset allocation and fund choices for the start of the new decade
By Tim Cooper 13 Jan, 2020
Bond investors: shaken, not stirred
Jennifer Hill speaks to six advisers and investment consultants about how they use bonds in clients’ investment portfolios
Six twists that might affect asset allocation in 2020
Laura Purkess talks to six experts who reveal what advisers should be looking out for when putting their portfolios together
