What should a diverse investment portfolio include?

During 2021, the fluctuations found in economic markets has made it more vital than ever that investors possess a robust portfolio that is diverse enough to weather any storm. Most financial experts agree that the most practical outlook and approach to investing requires a sensible balance between potential risk and return to achieve success.

Fortunately, wealth managers and other financial experts are able to offer expert advice and create balanced portfolios. For the most part, how a portfolio performs is predominantly determined by the asset types of which it is comprised. To spread the possible risks involved in investing, a diverse range of assets is key. When some assets are performing poorly, others will be increasing in value creating balance.

In the next sections we’ll take a closer look at some of the different asset types available that can be used to construct a diverse portfolio. Read on to explore the question of portfolio diversity in further detail.

What are alternative funds?

Numerous options for alternative funds are available to UK investors. Examples of alternative funds include hedge funds, managed funds, private equity, infrastructure, real estate, derivatives, and absolute return contracts, among others. This type of investment can be exceptionally useful to create diversification in a financial portfolio.

What do commodity funds involve?

Exceptionally volatile, commodity funds are regarded as a high-risk investment. In most cases, the funds will track the underlying price of natural resources or commodities. The advantage of such funds is that along with higher risk, there is greater potential for profitability in comparison to investments with less volatility.

What is an ethical investment?

Ethical investments, sometimes referred to as responsible investments, are often an ideal option to reach financial goals, while at the same time considering corporate governance, social, ethical and environmental factors. While previously ethical investments were known for lower yields, this has now ceased to be the case with an increasing amount of interest in more responsible assets.

How do cash investments work?

Renowned as a lower-risk option than other asset classes, cash investments offer investors the lowest risk of losing their money. Experienced investment advisors can help their clients make strategic cash investments, reducing risk and developing cautious yet balanced portfolios.

Are you looking for experienced portfolio management services?

If you require expertise in portfolio management around Shropshire and Chester, we at Hartey Wealth Management can help. Our specialist team creates portfolios that efficiently balance risk and return, enabling our clients to continue to grow their wealth using the asset classes detailed above.

By combining different asset classes and a mix of passive funds and actively managed funds, we are able to construct investment portfolios suited to our clients’ attitude towards risk and return, along with their personal ethics.

If you’re ready to build your first portfolio, would like a second opinion on the current assets you’ve assembled, or simply want to get some questions about portfolio management off your chest, get in touch with us today.


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