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.

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

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

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.