Five Essential Assets to Build a Strong Investment Portfolio

In today’s dynamic financial landscape, constructing a well-rounded core investment portfolio requires careful consideration of various assets. As financial advisers, we understand the importance of incorporating a balanced mix of investments to help clients achieve their long-term financial goals. In this article, we present five essential assets that form the foundation of a robust investment portfolio.

1. Global Stock Fund

A leading global equity fund that provides exposure to over 1,500 large and mid-cap companies across 20+ developed markets. This fund has gained popularity among index-tracking investors due to its impressive performance and global diversification. With a significant allocation to US equities, it has outperformed other indices over the past decade, making it a reliable choice for long-term investors.

2. Global Aggregate Bond Fund

Diversification across various asset classes is a fundamental principle of portfolio construction. An aggregate bond fund offers exposure to a diverse range of bonds issued by sovereign and corporate entities. By tracking a subset of the float-adjusted and scaled index bond fund, it has consistently delivered solid returns. With a focus on high-quality bonds and a superior yield-to-maturity, it provides stability and income to a core investment portfolio.

3. US S&P 500 Fund

For investors seeking direct exposure to the US equities market, the S&P 500 presents an attractive option. This fund tracks the performance of the S&P 500 index, comprising the 500 largest US-listed companies. Investors can access the growth potential of the US market, historically a key driver of global economic growth.

4. Emerging Markets Fund

Complementing the exposure from the Global Stock Fund, investors can consider adding an Emerging Markets Fund to their core portfolio. This fund offers exposure to over 1,000 companies representing 85% of the free float adjusted market cap of 20+ emerging economies. Despite challenges faced by emerging markets, this asset class presents high growth potential, making it an appealing choice for long-term investors seeking further diversification.

5. Gold Fund

As a hedge against volatility and economic uncertainty, exposure to gold can be beneficial in a core investment portfolio. Gold has historically been considered a safe-haven asset during times of market turbulence, making it a valuable addition to a core portfolio. By investing in gold, investors can potentially protect their portfolio from adverse market conditions.

Conclusion

Building a strong investment portfolio requires exploring a diverse range of assets. By incorporating these five essential assets, investors can establish a robust foundation for long-term financial growth and stability. As financial advisers, our role is to assist clients in customising their portfolios to align with their individual financial goals and risk tolerance.

FAQs

1. Why is diversification essential in building an investment portfolio?

Diversification across various assets helps spread risk and reduce the impact of individual asset performance on the overall portfolio. It allows investors to benefit from different market conditions and can contribute to long-term stability.

2. What makes the Global Stock Fund an attractive choice for investors?

The Global Stock Fund provides exposure to a wide range of large and mid-cap companies across developed markets. Its strong performance and global diversification make it a favoured option for long-term investors seeking growth opportunities.

3. How does the Global Aggregate Bond Fund contribute to portfolio stability?

The Global Aggregate Bond Fund offers exposure to a diverse range of bonds, including those issued by sovereign and corporate entities. Its focus on high-quality bonds and a superior yield-to-maturity can provide stability and income to a core investment portfolio.

4. What benefits can investors gain from the US S&P 500 Fund?

The US S&P 500 Fund provides direct exposure to the 500 largest US-listed companies, allowing investors to tap into the growth potential of the US market, which has historically been a key driver of global economic growth.

5. Why should investors consider adding an Emerging Markets Fund to their portfolio?

Complementing the Global Stock Fund, an Emerging Markets Fund offers exposure to companies from 20+ emerging economies, presenting high growth potential. For long-term investors seeking further diversification, this asset class can be an attractive choice.

6. What role does gold play in an investment portfolio?

Gold serves as a hedge against market volatility and economic uncertainty. As a safe-haven asset, it has historically protected portfolios during turbulent times, making it a valuable addition to a core investment portfolio.

7. How can financial advisers assist in portfolio construction?

Financial advisers play a crucial role in customising portfolios to align with clients’ individual financial goals and risk tolerance. They provide expert guidance in selecting suitable assets, specific percentage allocations inline with your risk tolerance in order to create a well-rounded investment strategy.