A Resilient Portfolio

An appropriate asset allocation enhances the resilience of our investments and is better equipped to withstand market volatility.

Each asset class responds to changes in the economic and financial environments differently and has its own cycle. A multi-asset portfolio typically covers multiple asset classes, including equities, bonds, cash, foreign currencies, and real estate. In recent years, some investors have included alternative investments, such as virtual assets, to their portfolios in the hope of making them more diverse.

In addition to asset classes, asset allocation can also be achieved across different industries, markets, and investment horizons. Since a fund (including an exchange-traded fund (ETF) usually comprises a basket of investments, many investors choose to build a multi-asset portfolio through funds.

A multi-asset portfolio alleviates the impact of volatility in any single asset class, market, or industry, thereby reducing the overall volatility of the portfolio. Its importance stems from the ability of other investments to buffer or even offset losses when one investment underperforms.

Asset allocation is a key strategy for mitigating risk and stabilising long-term returns. In volatile markets, investors should consider both opportunities and protection. Compared to a concentrated portfolio, a multi-asset portfolio ensures a more resilient portfolio.

Building a multi-asset portfolio is never a one-off mission. As the investment world changes rapidly, investors must review and adjust their portfolios regularly to maintain a stable and manageable risk and return profile.