It would be helpful to advisers and their clients if funds and model portfolios had some sort of common risk-grading system. But as gbi2 managing director Graham Bentley points out, we are currently a long way from that being the case.
What do you call your model portfolios? Do you use subjective human behaviours such as 'cautious', 'balanced', 'aggressive'… 'psychopathic'? Or do you prefer a zoomorphic approach, perhaps using degrees of cuddliness: 'Bambi', 'Baloo', 'Banzai' or 'Balrog'? The regulator is concerned that portfolio names may not reflect varying exposures to equities; clients thus finding themselves in portfolios that may hold greater risks of capital loss than they were led to expect. Yet this represents a fundamental misinterpretation of the issues. 'Asset allocators' such as Distribution Technology,...
To continue reading this article...
Join Investment Week for free
- Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
- Get ahead of regulatory and technological changes affecting fund management
- Important and breaking news stories selected by the editors delivered straight to your inbox each day
- Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
- Be the first to hear about our extensive events schedule and awards programmes