Asset Allocation and Attitude to Risk | MitonOptimal Portfolio Management (CI) Limited

Asset Allocation and Attitude to Risk

Different asset classes expose investors to differing levels of risk. Asset allocation is the science of adjusting exposure to these asset classes to produce a risk profile that matches the investor’s particular circumstances. For example, a client aged 40, still in employment and planning on taking their retirement in 20 years time would normally have a higher propensity to risk than a 70 year old who is relying on the investment portfolio to fund their retirement.

Asset Allocation Examples

Niche’s range of seven investment models will cover the majority of clients’ current and future investment needs.

Niche Balanced Diversified Portfolio Model
Balanced Diversified Example

A larger proportion of our investors have a risk profile which indicates that the Balanced Diversified model is suitable for them. This model has exposure to over 25 individual funds (the holdings within the equity allocation can be seen below). Furthermore, the actual positions within each fund can contain up to 150 individual securities providing diversification.

Drill down into Equities (55%)
■ Nevsky Fund C (GBP)
■ Investec GSF Global Energy A DIS (USD)
■ Findlay Park US Smaller Companies (GBP)
■ Findlay Park Latin America Fund
■ BlackRock Gold & General Fund Acc
■ Sanlam Universal Global Best Ideas Class A
■ Sarasin Equisar Global Thematic Fund (Acc)
■ Veritas Global Equity Income Fund (GBP)
■ Henderson Horizon Global Technology Fund


The portfolio above is an illustration of the diversification offered by the Balanced Diversified Portfolio. It is not indicative of the positions that the fund would hold on an ongoing basis, as these positions would change in line with market conditions and future investment management decisions.

Defensive Diversified

5% Cash
30% Equities
15% Properties
20% Alternatives
30% Fixed Income

Defensive Traditional

5% Cash
30% Equities
15% Properties
50% Fixed Income

Balanced Traditional

5% Cash
50% Equities
15% Properties
30% Fixed Income

Aggressive Diversified

5% Cash
75% Equities
5% Properties
10% Alternatives
5% Fixed Income

Aggressive Traditional

5% Cash
75% Equities
10% Properties
10% Fixed Income


5% Cash
0% Equities
0% Properties
95% Alternatives
0% Fixed Income

 The portfolios above are illustrations only of the diversification offered by the different portfolio models. they are not indicative of the positions that the portfolios would hold on an ongoing basis, as those positions would change in line with future investment management decisions based on current market conditions.

Making a Difference

The seven investment models offered through Niche are produced from a blend of the Core Funds.

Preference for Traditional or Diversified asset allocation

Niche makes a distinction between those portfolios that include alternative investments (“Diversified”) and those that specifically exclude them (“Traditional”). A client indicating an interest in alternative investments will enjoy access to assets such as student accommodation, life settlements, fine wine, traded endowments, protected income, commodities, hedge and currency funds plus other specialist areas of investment.

Well managed alternative investment vehicles can provide absolute returns, low volatility, little or no correlation with bonds or equities and potential insulation from disruption in mainstream markets.

Use of funds

Collective vehicles offer a number of advantages in constructing portfolios, which we strongly believe can contribute to the achievement of superior performance for a lower risk than holding individual securities.

Portfolio Construction

The portfolio models are initially constructed by deciding asset allocation, which is derived from the risk profile of the portfolio, then by selecting a range of exceptional fund managers running specialist strategies within each asset class. This method has several objectives, including:

  • Lower risk – a broad spread of underlying investments diversified by geography and asset class;
  • Enhanced performance – access to ‘best of breed’ managers at institutional rates; and
  • Management – realignment of portfolios within each risk profile.

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