How Balanced Portfolios
Work For Investors
How Balanced Portfolios Work For Investors
Striking a balance between risk and return is the cornerstone of successful investing
When you invest, you are exposing your capital to risk, i.e. the possibility of losing money.
Not much can be done about this so savvy investors aim to strike a balance between the risk taken by their selected investment and its potential for growth.
This balance differs from person to person and is identified by a risk profile. A risk profile basically tells you how much risk that you are willing and able to take with your capital.
Perhaps the important thing about your risk profile is that it can identify a fund that minimises the chance of incurring a loss outside your comfort zone while striving for an expected return. The balanced fund, which invests in two asset classes typically fixed income and equities, is the quintessential unit trust fund that manages risk and return based on a stated investment objective.
Equities are held to provide good returns when the underlying economy performs. Meanwhile fixed income are acquired for its stable and steady returns. With both these asset classes, a balanced fund is already diversified and this makes it a suitable standalone fund for new investors and those that do not have the time to manage their investments on a regular basis.
A good balanced fund also serves as a core fund in an investing portfolio. If it meets its investment objectives, such a fund could be held for decades, so long as its risk-return profile matches your risk profile.
A growth balanced fund which holds more equities may be suitable to take on more risk for better returns. It can also be designed to hold more fixed income vis-à-vis equities and appropriate for those that are more conservative.
A valid concern in the investing world is the expense ratio charged by unit trust funds. This eats into the actual return accrued to the investor. An efficient balanced fund has a low expense ratio, which improves investor returns.
Lion Global Investors Limited (“LGI”) is a company incorporated in Singapore and a member of the OCBC group.
This publication is for information only. It is not an offer or solicitation for the purchase or sale of any securities/investments and does not have regard to your specific investment objectives, financial situation or particular needs. All applications for units in our funds must be made on application forms accompanying the prospectus. You should read the prospectus and Product Highlights Sheet for details, available and may be obtained from Lion Global Investors Limited (“LGI”) or any of its approved distributors, before deciding whether to subscribe for or purchase units of the Fund. Investments in the Fund are not obligations of, deposits in, guaranteed or insured by LGI or any of its affiliates and are subject to investment risks including the possible loss of the principal amount invested. The performance of the funds is not guaranteed and the value of units in Fund and the income accruing to the units, if any, may rise or fall. Past performance, as well as any prediction, projection, or forecast on the economy, securities market, or the economic trends of the markets are not necessarily indicative of the future or likely performance of the funds. Any opinion or estimate provided in the publication is made on a general basis and is not to be relied on by investors as advice. Investors must make their own assessment of the relevance, accuracy, adequacy and reliability of the information provided and make such independent investigations as they may consider necessary or appropriate for the purpose of such assessment. LGI reserves the right to make changes and corrections to its opinions expressed here at any time, without notice. Accordingly, no warranty is given and no liability is accepted for any loss arising directly or indirectly as a result of you acting on any information, opinion, forecast, or estimate contained herein. You may wish to seek advice from a financial adviser before making a commitment to purchase the Fund. In the event that you choose not to seek advice from a financial adviser, you should consider carefully whether the Fund is suitable for you. The Fund may invest in financial derivative instruments such as futures, options, warrants, forwards and swaps for hedging purposes or for the purpose of efficient portfolio management.
The references to any particular company is intended for illustration purposes only and is not indicative of Lion Global Investors Limited’s intention to invest in such company or a recommendation to readers to invest in the securities of such company or its products or services.
LGI, its related companies, their directors and/or employees (collectively known as “Related Persons”) may have positions in the products mentioned in this publication. LGI and its Related Persons may be engaged in purchasing or selling the products mentioned in this publication for themselves or their client. LGI does not take into consideration the tax implications of the income earned as the tax position of each person is different. Investors are advised to seek independent tax advice on their personal tax position arising from investing in the fund.
© Lion Global Investors Limited. All rights reserved. (UEN/Registration No. 198601745D). LGI is a Singapore incorporated company, and is not related to any corporation or trading entity that is domiciled in Europe or the United States (other than entities owned by its holdings companies).