It can't be easy being a diversified portfolio manager these days. Whilst several years of QE and ZIRP have buoyed both equity and fixed income markets, fears of rate hikes, margin compression and valuations that are already on the high side have many wondering what kind of returns will be generated in the coming years, with even RBA Governor Glenn Stevens warning retirees they face a period of greater risk ahead. Managers also need to place a bet on the inflation/deflation tug of war - a battle that has raged since the GFC hit, with slow growth, private sector belt tightening and low money velocity battling unprecedented central bank monetary largesse. The situation is complex, but could the answer to protecting and steadily building wealth in the coming years be as simple as maintaining roughly equal weights to four primary asset classes (cash, stocks, bonds and gold), and following a disciplined rebalancing strategy that allows one to harvest volatility, adding to returns. The latest quarterly report from Cor Capital, Australia's only permanent portfolio, make this very case. Link here (VIEW LINK)
Great report Jordan - "adjustm ents involved trimming the Fund’s investment in relatively popular assets and adding to unpopular assets, contrary to the ‘herd’"