At Ords, we seek to sensibly manage investment risk to ensure our clients are adequately rewarded with higher returns for the risks they undertake. Using the analysis of our Research Team and investment professionals, the primary way that we manage risk for our clients is by constructing carefully diversified portfolios. The following two types of diversification are of most importance:
- Diversification across asset classes – asset allocation and
- Diversification within asset classes – security selection and portfolio construction.
Diversification involves thorough research, analysis and the use of the latest tools, techniques and investment theory to arrive at the best allocation of a client’s wealth among a range of investments. The aim is to maximise the probability of achieving stated investment goals while managing risk in a way that best suits the individual.
Sensible diversification reduces risk because when one or more of your investments may be delivering lower returns, other investments will be performing more strongly to offset those lower returns. The overall result is a portfolio that provides a more stable growth profile.
Spreading your wealth among a number of different investments means that while you may not achieve extraordinary gains from holding a few well-performing investments, neither will your portfolio’s performance be severely compromised by a single poorly performing investment.