Win­ners

Finweek English Edition - - MONEY -

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

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