Multi-asset or balanced funds can offer a measure of protection against market volatility, which is expected to continue as long as factors such as uncertainty over a possible investment rating downgrade for South Africa, unpredictable Chinese markets and question-marks over the timing of the next interest rate hike from the US Federal Reserve continue to impact on global economic jitters.
This is according to Brian du Plessis, Executive Director at Rezco Asset Management, which recently won two awards at the 2015 Raging Bull Awards. Du Plessis says, “The allure of multi-asset or balanced funds in times of market volatility is that the funds can increase or decrease the exposure of the fund to different asset classes. These asset allocation calls are undertaken by the fund’s portfolio manager. Portfolio managers who do their job correctly manage to reduce the downside that their funds experience but at the same time profit from a significant portion of the upside.” Du Plessis says balanced funds offer a way for investors to not get caught in the hype of the markets. “Balanced funds enable both individual and institutional investors to be invested across various asset classes, and in weightings which the professional portfolio manager feels are optimal given the current market environment. “By investing in a balanced fund, an investor is essentially outsourcing the asset allocation calls to a professional portfolio manager, whose job is to constantly monitor the market and determine the optimal weightings of the various asset classes in the fund’s portfolio. In so doing, the investor is also removing emotion from his investment decision making.” Du Plessis says the last few years have seen large amounts of investor flows into balanced (multi-asset) funds. “Various studies have shown that asset allocation calls are the single biggest driver of alpha, in other words generating returns above a fund’s benchmark.” He clarifies that Rezco’s asset allocation and investment philosophy protects its investors from the down side, while offering upside protection. “Core to what we are trying to achieve at Rezco is to obtain risk-adjusted returns for our clients, by gaining the most return for our clients without exposing their investment to too much risk. “Our investment philosophy is to preserve capital[1] in times of high volatility and to create wealth for our clients when the opportunities present themselves. This is obtained by picking the stocks in the portfolio that participate as much as possible in a bull market, and as little as possible in a bear market. In this way, the Rezco funds are able to preserve our clients’ capital[2] and create wealth.” When selecting a balanced fund, investors should choose funds that have a long-term track record (10 years or more) as well as fund managers with a proven track record of being able to manage money through both bull and bear market cycles. Source: Rezco Please contact Kevin or Thato, email: invest@daberistic.com, for any queries about Rezco investments
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