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A Diversified Asset Allocation

This article is reproduced with permission from
Normandy Advisory Services Sdn. Bhd (Licensed Investment Advisor)
15th Floor Menara Multi-Purpose, No 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur
Tel : 03 - 469 5560 Fax : 03 - 294 5561


This article is copyright and no part of it may be reproduced in any form without the prior consent of Normandy Advisory Services


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In short, your portfolio should be constructed taking into account the economic and political landscape. Your asset allocation strategy should pay attention to long-term valuation yardsticks and the state of the general investment environment. More importantly, you should be investing for long-term.

You may combine the three broad asset classes of stocks, bonds and cash with a mixture of domestic and international. Your allocation would basically depend on the outcome of your research. For instance, you may want to reduce your exposure in the local stockmarket given the current volatile market conditions.

Apart from the economic and political risks, there are other potential risk factors which you should take note of when constructing your portfolio. There are currency risk, availability of information, different transaction costs, administrative costs plus settlement problems.

Considering the volatility of international markets, you are likely to review your portfolio more frequently. You may construct a ýmodelţ portfolio based on the ideas formulated from research and test them for a specific period of time preferably a 6-month period.

You are likely to review your asset allocation or investment strategy more frequently if you find that the return is far from satisfactory. Your plan may require some fine tuning, or even a complete overhaul particularly if the condition of the market you are in varies dramatically.

Clearly, what we have discussed has been greatly simplified. It is always preferable that you discuss in detail your plan with knowledgeable investment professionals who can provide you with impartial investment advice.

Investing in various investments in different markets can be rewarding as it spreads your investment risk but it can also be detrimental to your wealth if the investments were not properly managed.

Generally, an easier alternative to get access to international financial markets is to invest in various unit trusts or mutual funds managed by professionals. To summarize, split your money among various asset classes and focus on them

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Reproduced with permission from Normandy Services Sdn Bhd, Email:nassb@po.jaring.my Tel:603-4695560 Fax:603-2945561