Spectrum’s guide to Investment Risk

riskguide

At Spectrum, we believe clients need to understand contracts, pros and cons, tax treatment and of course, investment risk.

Our Peter Brooke has written a series of articles on “risk” and asset descriptions. We intend to build a library of our adviser’s views in this area. These views are influenced by the Continuous Professional Development training our advisers are exposed to. We are using training resources of some of the biggest names in Financial Services, BlackRock, JP Morgan, the Prudential to mention a few.

We confess … we will not always suggest the very best investment strategies, our fund selection process eliminates some of the more exotic investment opportunities, we and we believe our clients, much prefer to take a safer route. We will only use daily traded, EU compliant funds, usually from the very top brand fund managers. Where we propose structured notes, usually for a fixed term, these will be straight forward and easy to understand. In both cases, we will not take an initial commission, if one has to be paid, we will rebate it in full to our clients.

Spectrum’s Peter Brooke’s series on Asset Classes and Risk

I believe risk is like energy… it is not created or destroyed… simply changed from one type of risk to another. If we build a total asset portfolio with this in mind we can make sure that we understand each assets risk profile and ensure we aren’t taking too much of any type of risk…

for example a very well diversified portfolio as follows could be broken down as:

diversified portfolio

ASSET                             VALUE           RISK TYPE
cash 60000 interest rate
property 250000 liquidity
pension equities 100000 investment
pension bonds 50000 credit
investment equities 125000 investment
investment bonds 75000 credit
art 15000 liquidity
collectables 10000 fashion
gold coins 20000 security

 

But when we total up the risk there may be too much of one type (eg liquidity or investment) and more diversification is needed… or we may be happy with the spread of types of risk.

diversified portfolio 2

 

 

 

 

 

 

More on risk and investing in different assets