currency weakness. This weakness in the c ur r ency r esu l t ed i n of f shore a nd resource funds outperforming quite significantly at the time the investment was made.
After consulting with the client and taking him through a structured investment-planning process, we structured a more balanced portfolio for the client. This portfolio was reviewed with the client recently. The impact of choosing recent winners i n t his i nstance was severe and negative. We have j ust recovered the initial investment capital and started seeing some growth in capital of late. The difference is that we structured a portfolio for the long term (10 years in this instance) by choosing a strategy that was based on long-term investment principles, and primarily that of diversification. There are a number of areas in which the new portfolio ( NP) is diversified:
Across domiciles: the NP has exposure to local and offshore assets. The old portfol i o (OP) was heavily biased towards offshore exposure.
Across asset classes: the NP has exposure to equities, bonds, property, and cash. The OP had exposure to equity and some offshore cash.
Across sectors: within t he equit y exposure the NP is exposed to resource, industrial and f inancial shares. The OP was primarily exposed to resource shares.
Across managers: the NP was exposed to five different asset managers. The OP was exposed to one asset manager as a result of the salesman having been tied