Art of asset allocation

SHORT-TERM: CAPITALISE ON DISLOCATIONS

- Rothea van Biljon

What factors do you consider when making asset allocation decisions? When it comes to asset allocation, we first consider a general top-down macro approach like synthesising large amounts of economic data to determine the state of the global economy and where we are in the overall business cycle.

Inflation and interest rate dynamics, along with GDP growth and the health of the labour market, particularly in the US, are crucial inputs we interrogate. We also consider fundamental factors when it comes to valuations of asset classes, such as corporate earnings growth expectations, prevailing bond yields, cash rates, and property yields.

How do you balance the need for diversification with the pursuit of higher returns?

We balance the need for high returns with a strong emphasis on capital protection as well. Unfortunately, returns from capital markets do not come in a straight line, especially from risk assets (such as equity and listed property).