The STRIDE Blog

How To Allocate Assets to Minimise Risk and Maximise Reward

stride-how-to-allocate-your-assets-to-minimise-risk-and-maximise-reward-socialHave you been wondering which asset classes you should choose, how much you should assign to each class and where exactly you should invest?

It may be possible to make great long term investment returns from one stock, but it is equally possible to lose everything. We don’t want to take chances with our money. If high risk chance was our thing, we wouldn’t be value investing. We'd be sitting at a poker table or standing in line to buy a lottery ticket.

As value investors we dislike risk intensely. All we want to do is keep our capital safe, while it grows as much as possible. Allocating your assets effectively plays a huge role in lowering risk and increasing returns.

The key to this is dividing your money across asset classes of differing risk; market cap, industry, geography and currency. The lower risk instruments will offer safety and stability but also low returns, counter balancing the higher risks associated with equities. This takes advantage of market peaks and troughs to generate a positive risk-return ratio.

STRIDE’s asset allocation model enables value investors to generate their desired returns at a risk level that suits them.

Using our asset allocation model, we can demonstrate how it is possible for a confident investor to achieve 11% annualised returns with a very low risk profile. For the cautious or mindful investor, this is more like 5 - 8%. Bold investors who can stomach volatility and are committed to almost daily input, can realistically aim for 20% returns per annum.

In our Asset Allocation and Effective Portfolio Management eBook we explain the benefits and dynamics of asset allocation and provide the information and tools for you to:

  • Calculate your cash horizon
  • Identify your investor personality
  • Determine your risk profile and the different types of risk exposure
  • Understand the different asset classes and how they can work for you

Investors of every profile are achieving great returns with significantly reduced risk by using STRIDE’s asset allocation model, investing in undervalued, fundamentally strong businesses and taking a long-term approach.

We are going to show you how to do exactly the same in our eBook.

Download your complimentary copy of Asset Allocation and Effective Portfolio Management Part One here

Topics: Asset allocation

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3D Value Investing: Triangulating The Best Investment Targets

3D Value Investing uncovers the best businesses for investment, the fair value of those businesses and the best times to buy in and sell out. This approach to long-term investing results in higher returns with lower risk.

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