Equities  

Guide to building a sustainable multi-asset portfolio

  • Describe the challenges faced by bond investors in the years ahead
  • Explain the impact of monetary policy on portfolio construction
  • Identify the challenges facing clients in decumulation in the years to come
CPD
Approx.60min
Guide to building a sustainable multi-asset portfolio
 Pexels/Mehrad Vosoughi

Introduction

Investors seeking to put together a multi-asset portfolio were once guided by various rules of thumb, which said that government bonds are inversely correlated with equities, while shares generally rise in line with economic sentiment, rather than central bank action. 

The policy response to the Global Financial Crisis in 2008, and now to the pandemic-induced recession, has caused many of those rules of portfolio construction to come under pressure, while the pace of technological change contributes to a period of radical uncertainty for investors and clients.

Perhaps the biggest question mark lingers over the role of government bonds in portfolios, after a decade of record low yields called the diversification benefits of the asset class into question, while materially higher inflation could call the capital value of those assets into question. 

Inflows into alternative assets have been strong in recent years as clients look to diversify away from the fresh risks associated with bonds and equities, but how would those assets perform in a world of higher interest rates? And how does the rise of ESG investing impact asset allocation? 

This guide seeks answers to all of those questions as part of the solution to constructing a sustainable multi-asset portfolio. It is worth 60 minutes of CPD. 

In this guide

CPD
Approx.60min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. Why might government bond yields not offer the same level of protection in the future as has historically been the case?

  2. What does Krishnan believe could change the outllook for inflation in the years to come?

  3. What risks does Alex Farlow place alongside ESG risk?

  4. What type of stocks does Balmer believe clients risk being over-exposed to in an ESG portfolio?

  5. Why does Balmer believe a medium risk income portfolio is riskier now than in the past?

  6. What is the precise aim of the central bank policy of quantitative easing?

Nearly There…

You have successfully answered all the questions correctly, well done!

You should now know…

  • Describe the challenges faced by bond investors in the years ahead
  • Explain the impact of monetary policy on portfolio construction
  • Identify the challenges facing clients in decumulation in the years to come

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