Montage portfolios are different. We have developed a range of 11 portfolios. Each portfolio has a specific weighting of growth (riskier) and defensive (less risky) assets, and therefore a specific risk profile. This weighting is called ‘asset allocation’.
In our range of 11 portfolios, the lowest risk portfolio has a 0% allocation to growth assets, the highest risk portfolio has a 100% allocation to growth assets, and each portfolio in our range has a 10% increment in growth assets from the previous one.
Each of our portfolios are called MPMnumber named after the allocation to growth assets that they hold, so it’s easy to understand at a glance the risk the portfolio is taking. For example, MPM030 has 30% allocated to growth assets and MPM060 has 60% allocated to growth assets. Simple.
is named after
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STRATEGIC ASSET ALLOCATION
Modern Portfolio Theory states the vast majority of the behaviour of a portfolio is due to asset allocation. The strategic asset allocation will be the most significant determinant of long term investment returns and portfolio value stability. We combine different types of investment with varying risk/return characteristics, to create a range of efficient portfolios with the highest potential return expectation for each specific risk profile.
TACTICAL ASSET ALLOCATION
We live in the real world, so we apply a short term ‘bias’ to the asset allocation of each of our portfolios to reflect our views of economic and market outlooks. We’re trying to improve returns, or reduce losses, by making measured adjustments to asset allocations over shorter time scales. We do this without fundamentally altering the long term strategic risk/return profile of the portfolios.
INVESTMENT FUND SELECTION
We identify and use fund managers in our portfolios with the potential for outperformance. We’ll use actively managed investment funds in our portfolios where we believe it is worth paying a higher annual management charge for a fund manager who has the potential for generating additional returns. If we can’t see value in active investment funds for a particular sector we will use passive funds.
We can make changes to our portfolios at our discretion. We believe this offers significant advantages as we can change things quickly and efficiently, without the delay that would be incurred writing to clients and waiting for their approval to proceed. If we identify an opportunity to improve a portfolio tactically, either to add upside potential or downside protection, we can do so quickly and efficiently for all clients invested in our portfolios.
ARE MY CURRENT INVESTMENTS RIGHT FOR ME?
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The starting point for matching you to a
portfolio is Risk Profiling. This is a process for
finding the optimal level of investment risk you are
prepared to take, considering three areas: