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Pursuing a better investment experience

AES shares a collective belief about how capital markets function and how caring, future-focused individuals should approach long-term investing.

We know the 'traditional financial services industry' is hopelessly out-of-date and investors need help to cut through the media hype, folk tales, and marketing spin in order to get better results.

Our objective is to help guide you to a new perspective on investing in order to drastically improve your odds of success and experience.

Modern investment science proves good investing is all about your behaviour and the decisions you make now and in the future.

But there's a mismatch between what science knows and what people do. 

As a result, decisions that may feel entirely natural can often mean smart people end up taking unnecessary risks, trusting flawed sources, failing to adequately diversify portfolios, and incurring excessive fees and taxes, leading to poor investment outcomes with insufficient returns and excessive risk.

Patient and disciplined investors, with a long-term perspective, who have the self-awareness to heed guidance grounded in fact, benefit greatly from the remarkable power of capital markets. Others, often don't.

All you need to do is make five well-informed decisions to leverage the wisdom accumulated by Nobel prize winners over the past six decades, thereby putting the odds of a successful investment experience firmly in your favour.

Jump to any decision to read more

The five decisions

  1. The Do-It-Yourself Decision

    Should you try to invest on your own or seek help from a professional? If so, who?

  2. The Asset Allocation Decision

    How should you allocate your investments among stocks (equities), bonds (fixed income), and cash?

  3. The Diversification Decision

    Which specific asset classes within these categories should you include in your portfolio, and in what proportions?

  4. The Active versus Passive Decision

    Should you opt for an actively-managed approach to investing , or a more passive approach?

  5. The Rebalancing Decision

    When should you sell and when should you buy more?

Each of these decisions significantly influences your overall investment journey.

Whether you realise it or not, every day you're making these decisions, even if you choose to maintain your current strategy and take no action with your investment portfolio.

Below, we'll provide you with the necessary knowledge to navigate these decisions. To assist you in making intelligent choices, we'll share our perspectives, counsel and recommendations with you.

a question of trust

The Do-It-Yourself Decision

This is perhaps a question of who best to trust.

Do you trust yourself, or do you get professional help? 

If you get help - how can you ensure it is absolutely trustworthy? What are the likely aggregated costs behind each pathway and which choices represents the best value to you?

The do-it-yourself (DIY) option is popular because it's the place at which almost everyone starts. 

Those with smaller amounts to invest can't afford professional advice and for those accumulating or saving money when younger in life - matters are often far simpler than for those in later life and with much more at stake.

Social media is awash with time- and money-saving ‘life hacks’ for fashion, make-up, recipes, exercise, home renovation, how to parent, home/car maintenance, and... how to invest.

But trying to invest on your own can be challenging, time-consuming, emotionally draining, and hugely expensive if you get it wrong. Like doing nothing and sitting in cash (with future purchasing power being eroded at 10% per annum by inflation), it often isn't easy to see these costs because it's the 'future opportunity cost' of loss compounding over the remaining years of your life, that's being slowly eked away.

On a positive note, you only have yourself to blame if something goes wrong and you don't need to pay anything for it (unless you count the compounded cost of getting things wrong). It's therefore a cheap option in the short term, but likely an expensive one in the long term.

Statistics strongly suggest most individual investors lack the necessary skills, deep market knowledge, proprietary tools, and motivation to effectively and successfully manage their own investments.

Building and maintaining an efficient portfolio that is appropriately diversified, minimises fees and taxes, and avoids redundant assets is a daunting and overwhelming task for nearly all individual investors. 

More starkly, creating a robust and comprehensive lifetime financial plan and sticking with it through the ups and downs of life, is something we'd argue is unavailable to the unaided human mind and investment hobbyist or enthusiast.

When it comes to investing, the evidence suggests the DIY trend typically doesn't save time, and doesn't save nor make money. Finance is intricate, the odds are often stacked against you, and the stakes are extremely high –i.e., your entire financial future is on the line.

Just as you wouldn't be expected to beat Roger Federer in a tennis match - it's hard to envisage the possibility of ever beating the wisdom of Nobel prize-winning laureates in investment. Although we're obviously biased, as the only CEFEX certified fiduciary within Asia, the Middle East and Africa (AMEA), we've hundreds of thousands of hours of experience in dealing with caring, successful families and are yet to witness a DIY approach that consistently produces better outcomes over any meaningful period of time.

Just as you wouldn't make significant medical decisions without consulting a doctor, whose vocation is to serve you with your best interest at the forefront of all that they do, we believe your financial health is often best entrusted to objective professionals who can be 'by your side' and guide you, just like you do with your physical health.

For those who have enough assets to be able to afford professional advice, we'd only advocate the DIY approach if you view managing your wealth as an engaging outlet, a source of genuine pride, something you wish to diligently pursue, invest time into, and study in great detail. We say genuine, because half-hearted DIY attempts can be extremely costly and it is, in our view, highly unlikely you'll get a superior outcome to an experienced, full-time professional in either the life financial planning or investment management domains.

If this isn't you, the question, therefore, comes down to 'who exactly to trust and why'. It encompasses 'what is fair to pay' and 'what's going to represent the best value' for you.

Taking advice could be the best investment you’ll ever make. Professional financial advisers are entirely transparent and charge a fee, and the value and benefit you get over the long term can easily exceed the fee many times over.



Why DIY gets lower returns

Every year, the Dalbar study looks at the effects of emotions on investing decisions.

The Dalbar study generally shows the average investor underperforms the market by a wide margin

2022 dalbar study also shows 20 years, same results  NOT just stock investors, but bond investors too

The grim reality of investment is that 80% of investors 'believe' they're 'better' than average and that the above statistics don't apply to their own performance. This is, of course, statistically impossible and can be put down to a number of behavioral biases.

Continuing with such biases, most DIY investors skip straight to the portfolio management itself, missing out on the often far more valuable parts of wise 'life financial management'.

Goals. Plans. Portfolios. In that order. 

An investment portfolio serves a plan. The plan sets out the entire roadmap to achieve lifetime goals. Without the goal, what's the point of a portfolio? Each investor should always define what money means to them and what money needs they have, in order to achieve, then fund, their ideal future.

Manage your emotions

How does this happen?

As we’ve evolved as a species over the last 300,000 years, our brains have developed a fine-tuned mechanism that alerts us to danger.

That alert keeps us alive. Our fight-or-flight response is triggered automatically when the brain senses a threat.

This has held us in good stead over the millennia. Spotting a physical danger, like a lion staring right at you, can pin you to the spot in abject fear.

This finely-tuned fear response has been instrumental in the survival of our species. But – and this is an important but – it doesn’t come with an off switch.

Fight or flight is part of who we are. That was true on the savanna, and yes, it’s also true in modern living. That includes how we process and make hard decisions about capital markets.

We're therefore evolutionarily wired to buy stocks and bonds when their prices have already increased. We do so because we feel comfortable and confident during market upswings. Conversely, when markets decline, fear takes hold, and we often rush to sell.

This behaviour often leads us to buy at (or near) market peaks, and sell at (or near) market bottoms, resulting in the failure to capture even a market rate of return.

Whilst our psychology (ego) protects us from thinking we're making these errors or reacting in the wrong way - the reality is we're all human and this is played out in the numbers from studies such as Dalbar.

Our emotions around money aren’t limited to just investing. With saving, borrowing, spending, earning, and giving … all of these areas of money life trigger their own unique brain chemistry.

Our 'saving' brain is a bit different from our 'investing' or 'charitable' brains (cortisol, dopamine, oxytocin and endorphins). So, when we say your money fears and anxieties are all in your head, that doesn’t mean it’s made up or illegitimate. Not at all. It’s literally true.

Our emotional attachment to our hard-earned money is powerful. When we take risk, even just a little, we can feel it. It’s a physical sensation in addition to an emotional one.

With our money decisions, and with the emotional rollercoaster of investing in particular, it can be comforting to know that this is just who we are. With that knowledge, we’re a bit better able to pause and reflect, to gain perspective on what triggers us, even to adapt.

Emotional costs - human behaviour


In the world of investing, the media and the financial industry often play a significant role in shaping our decisions.

We're bombarded with financial publications such as Forbes, or captivated by the narrative spread across TV channels such as CNBC, BBC, or Bloomberg, all of which attempt to turn investing into a form of entertainment for the discerning masses.

This constant exposure can lure us into acting on new investment ideas, leading to additional commissions for brokers not operating with your best interests at the core of what they do.

Many in the financial industry still take substantial cuts as we move our money from one hyped investment to another.

As long-term investors, we must be aware of various behavioural biases that can work against us. Let's explore a few common ones:


We love confidence, and how beneficial it can be in many aspects of life, but overconfidence in investing can be detrimental. Success in one field does not guarantee success in the market. Even accomplished individuals have learned this the hard way through significant investment losses. Humility will typically yield you a far higher return.

Attraction to rising prices

Unlike with consumer goods, where rising prices prompt us to cut back or find alternatives, we tend to be more attracted to stocks or assets with increasing prices. We mistakenly assume that past price changes will continue. Similarly, we chase after mutual funds that have recently performed well and sell those that have underperformed. It's crucial to understand that past performance is not indicative of future results.

Herd mentality

There's comfort in following the crowd. When others are doing something, we tend to feel more comfortable doing the same. However, history has shown that when the herd moves in one direction, it may be wise to consider moving in the opposite direction to avoid potential pitfalls.


Mental errors 5 decisions

Fear of regret

The fear of making the wrong investment decision can often lead to hesitation and inaction. We may leave money uninvested out of fear of entering the market at the wrong time. It's important to remember that the right time to invest is when we have the funds available, and the right time to sell is when we need the money.

Affinity traps and personal relationships

There is a huge difference between genuinely unconflicted advice where you receive uncomfortable truths, and conflicted advice where you are likely to receive comfortable lies.  

Most people prefer the comfortable and personable option. We must acknowledge the dangers of falling into affinity traps. How often do we make investment decisions based solely on our personal connections, those we meet on the golf course, or the recommendations of respected individuals? Although these feel extremely natural decisions (how much we like someone), relying on such factors without conducting detailed due diligence and research can be extremely risky.

There are other emotions that can negatively impact our financial well-being. Charles Kindleberger, an economic historian, found that seeing a friend become wealthy can disturb and disrupt our own judgment. These emotional reactions, in turn, cloud our decision-making process.

Recognising these biases is crucial for making informed investment decisions. By understanding that the media and behavioural tendencies can influence our actions, we can take a more measured and rational approach to investing. It's essential to focus on long-term goals, conduct thorough research, and seek advice from unconflicted professionals to ensure a more certain financial pathway and improve your overall financial well-being.

Now, the question arises: Which type of adviser should you choose?

Bankers, brokers or independent, fee-only advisers?

In the past, bankers and brokers were the primary sources of investment advice due to the limited availability of independent, fee-only, fiduciary advisers and planners.

However, times have changed, and you now have a choice.

It's important to understand the significant differences between the two options before deciding.


Private bankers and brokers

Bankers and brokers, also known as 'wealth managers', 'financial advisers' or 'financial consultants', are often commissioned agents who receive incentive-based compensation for selling internal investment products on behalf of their firm or a third party. 

Brokerage or bank accounts

In a brokerage account, your banker or broker acts as an agent for their firm, prioritising the interests of the firm rather than yours.

Whilst they may provide occasional advice or stock tips, their main focus is typically generating trades and earning commissions. 

Some potential conflicts and drawbacks of a private banker or broker include:

  • Bankers and brokers receiving higher compensation for generating more trades. They'll therefore bring you 'new ideas' and esoteric investments, instead of putting in place an effective long-term wealth creation strategy and plan.
  • Bankers and brokers receiving better compensation for selling certain investment products over others.  
  • Bankers and brokers being limited to selling investment products approved by their firm.

Investment advisory account

In an investment advisory or "managed account," your financial consultant may offer additional services such as discretionary asset managers and advice on selecting mutual funds, all for a single fee. 

Drawbacks of these more traditional investment advisory accounts include:

  • Brokers still being limited to offering their firm's approved investment products.
  • The possibility of investment managers or mutual funds recommended by the broker paying their brokerage firm to be included as approved investments.
  • High aggregated charges and market underperformance that potentially erodes your future compounded returns.

The name game and changing hat tricks

It's worth noting that regulators have been ineffective in monitoring misleading titles used by brokers.

As a result, it's essential to ask tough questions and ensure their loyalty truly lies with you, rather than being enamored by big budget marketing campaigns claiming they work solely for your benefit.

Some brokers may claim independence but belong to organisations implicitly linked with the funds they sell.


Independent, fee-only fiduciaries

In contrast to brokers, independent, fee-only advisers are generally legally obligated to act as fiduciaries (trusted guides), prioritising their clients' interests.

They are more aligned with their clients and less encumbered by conflicts, constraints, and pressures faced by brokers (for example their staff are typically fully employed and not commission-only and self-employed).

Key aspects of independent, fee-only advisers include:


Investment fiduciaries typically charge a percentage fee based on the assets they manage, which often decreases as the account size increases. Unlike brokers, an adviser's compensation is transparent and straightforward. They only receive payment from clients and do not earn commissions or 'retrocessions' from the investments they recommend or for frequent trading.  

Benefits of an investment fiduciary

It's worth reiterating that an adviser, as a fiduciary, is legally obligated to prioritise your interests above their own.

By operating on a fee-only basis and without financial incentives tied to generating excessive trades or promoting higher-margin products, an adviser enjoys the freedom to select the most suitable money managers and investment products for your specific needs.

Their recommendations are not limited by proprietary investment offerings or conflicted interests and are likely to significantly reduce the total costs your pay, whilst increasing the statistical likelihood of a higher expected return.

A competent investment fiduciary can assist you in maintaining discipline and avoiding impulsive decisions driven by fear or greed, such as constantly moving your investments between securities, markets, or money managers.

Investment fiduciaries/independent fee-only financial advisers dedicate their time to your overall financial well-being, rather than devising ways to generate additional revenue from your account with new, often risky and opaque, investments. Consequently, they're well-positioned to provide guidance on crucial financial matters, including retirement and estate planning, insurance considerations, and mortgage refinancing.

In summary, the distinction is clear: bankers and brokers work in the interest of their firms or themselves, while investment fiduciaries/independent fee-only advisers work solely for you.

We strongly believe most investors who are serious about growing their wealth, should only ever seek the assistance of an independently certified fiduciary.  Such an adviser will meet a high number of prudent practices and brings much-needed discipline, wisdom and clarity to the investment process, helping clients become aware of and subsequently avoid behavioral pitfalls that can hinder their financial success.

An investment fiduciary will be able to provide a certificate proving they have been annually certified to meet the prudent practices and their firm audited as such.  They will also have a legal opinion and list of the specific practices they adhere to for your benefit.

A guide to selecting an independent, fee-only adviser

Choosing the right independent, fee-only adviser is a crucial decision that can have long-term implications for your financial well-being. 

Poor decisions can happen very quickly, and at any time, even after years of stability and hard work. One poor decision can unwind a 30-year plan and we've seen people at every stage of life, tempted by outrageous speculations. If acted upon, they would have forfeited a large portion of their wealth. 

A fiduciary investment adviser who's on your side is there to put a break on that behaviour. Good advice is about supporting good decision-making. This typically involves education, environment (ensuring exposure to good sources/reducing exposure to poor sources plus candid communication), and encouragement).

You may not be able to become a client of ours due to logistics, circumstances, capacity or general fit.  

It would be remiss if we didn't highlight key attributes a good financial adviser firm should have: 

Investment philosophy

Different financial advisers have varying approaches to managing investments and providing financial advice.

After familiarising yourself with different investment approaches, it's essential to find an advisory firm that shares your investment philosophy and aligns with your thinking about markets.

Look for an adviser who possesses a clear set of investment beliefs and methods and has effectively documented them in a statement they can provide you with.

If an adviser lacks a well-defined view or fails to articulate it clearly, it may be prudent to look elsewhere.

We'd advocate for an evidence-based or systematic investment philosophy, that should mean the firm is agnostic about investment products and will build you a highly diversified portfolio at a low cost.

Personal connection and trust

Personal finances is obviously personal. It's therefore common to choose whom you take advice from based upon personal relationships and people you like. Somewhat surprisingly, we'd suggest this is the worst way. It's far wiser to conduct thorough due diligence, and carefully select the firm (not the individual) for its culture, values, beliefs and 'why', than to blindly trust any individuals within it. 

The best financial planning firm's are typically 'guides', providing wise counsel like you'd expect from a Finance Director to you - the CEO of your own life. This means they're unlikely to agree with you and you'll need to be open to having your thinking challenged and hearing 'uncomfortable truths' rather than 'comfortable lies'. This can often mean the best financial advisers are not always the most likable - especially given the emotional attachment and biases we all have when it comes to our money and financial decisions.

We'd also advocate for a team-based approach known as an 'ensemble structure', over entrusting your entire financial future to any single individual. This is different to the traditional/old style of dealing with a 'solo' individual. 

Individuals' careers are transient, advisers retire, people die and circumstances change.  Whilst 'trust me' is easier to establish than a 'trust we' - a one-firm culture can likely produce significant results over the traditional approach of having 'your own' personal adviser. Here's what to look for:

  • Size: Whilst 'solo' and small firms can provide highly personalised service, larger firms have far deeper expertise, greater resources, better research, better risk management and broader capabilities. We'd suggest finding a firm with over fifty staff means you can get wisdom, continuity and expertise.

  • Professional qualifications: We'd strongly advocate for a Chartered Financial Planning firm and certified fiduciary that employees CFPs and Chartered professionals. Always ask to see and verify the certificates.

  • Experience: We'd advocate for choosing a firm that has been regulated for at least 10 years plus and is experienced in dealing with people in similar circumstances as yourself. Be cautious about new start-ups and small firms.

  • Business structure: Understand the organisational structure. Are you dealing with a 'solo' one man band, a 'silo' of self-employed individuals sharing office space, or an 'ensemble' with a team-based approach to advice delivery? Each structure has its advantages and disadvantages, so it's important to grasp how the business is set up and how the staff are paid before becoming a client.

  • Services offered: Determine whether a firm solely provides 'asset management' or offers a comprehensive range of services, including personal financial planning or wealth management. It can be highly beneficial to work with a firm that incorporates cashflow-led financial planning into its practice, as investment decisions should be made in the context of your overall financial situation.

  • Current clients: Ask about the types of clients a financial adviser works with and their ideal client profile. It's advantageous to find a firm whose client base aligns well with your needs and goals, as their experience with clients similar to you can be beneficial.

By carefully considering these factors and conducting thorough interviews, you can make an informed decision and select the right independent, fee-only, fiduciary adviser to guide you toward your flourishing financial future.

Fees and value

When you compare the charges from different financial services providers, it’s important you’re comparing like with like. Fee-based doesn’t always sound attractive in an environment characterised by ‘free advice’, where hidden commissions unknowingly erode your returns and hidden conflicts often drive the sale of sub-optimal and opaque investment funds and products.

You always need to understand how much you’re paying (in aggregate), how you’re paying it and what level of service you’re getting in return. You also need to be able to benchmark this against other options including the hidden costs of seemingly ‘free’ or ‘DIY’ advice. This dual calculation will allow you to determine whether you are getting good value.

Fiduciary financial advisers will work hard to minimise the costs (expenses, taxes and turnover) of investing for you. This doesn't necessarily mean they pick the cheapest solutions and funds, but always strive to deliver you with great value, optimised solutions, and the highest quality in everything they do. After all, your future is important and seeking a cheap lawyer, surgeon or other professional that uses the cheapest tools doesn’t always make sense.

The typical international value chain (total hidden costs) are 4.5% pa whilst in more developed markets such as the UK, they are closer to 2.4% pa. Even a simple mutual fund can have a total expense ratio of 2%+ whilst other investment instruments such as hedge funds go far higher. We believe these more expensive solutions are also characterised by sub-optimal returns so the dual impact of paying more and investing within funds that produce lower expected dimensions of return creates a double drag upon your future financial pathway.

In contrast, a good financial adviser will always advocate driving down the total costs you pay whilst following a Nobel prize-winning academic methodology to benefit wherever possible from higher expected returns. We'd suggest aggregated costs (custody, fund management, investment advice and financial planning) of between 1.5% and 2% represents good value for money.  

As the only certified fiduciary and fee-based planning firm within the GCC, we welcome the opportunity to talk to you about how we can deliver value through a problem-solving, possibility-capturing, lifelong partnership.

Aggregated annual fees vs. benchmarks*

Aggregated fees


'Asset Allocation is the entire ballgame' - Weston Wellington

The Asset Allocation Decision


Understanding the impact of volatility on returns 

Having a detailed understanding of risk is crucial in order to make informed decisions about which asset classes to include in your investment portfolio.

Within the 'traditional' financial services industry, conversations are often geared towards the potential return on investments, whilst neglecting to talk about the significance of the associated risk required to attain such returns.

To make sensible long-term investment choices, it's essential to understand the concept of risk, and importantly the key relationship between risk and return, before making any investment decisions.

For long-term investors, there are two primary types of investments that make up a typical portfolio:

Equities (or stocks)

These represent ownership stakes in companies. As a shareholder, if the company performs well, you stand to benefit from an increase in the stock price. Additionally, the company may choose to distribute dividends to shareholders either in cash or through additional shares. Conversely, if the company underperforms, the stock price may decrease, causing the value of your shares to decline. Numerous external factors can influence a company's stock price. Generally, equity investments are considered to have higher risk and higher expected returns.

Fixed income (or bonds)

These entail lending money to entities such as the U.S. government, states, or companies, effectively functioning as IOUs. Bonds involve contractual obligations wherein the borrower typically pays interest at regular intervals and eventually returns the initial investment upon maturity. Bonds are generally regarded as lower risk and lower expected return investments, particularly those of high quality and short-term nature.

Financial economists identify various types of investment risks, including:

Credit risk

The possibility a company's credit quality may deteriorate, resulting in potential losses for bondholders or creditors.

Inflation risk

Over longer periods, the real return of your portfolio (the return adjusted for inflation) can be significantly lower than the nominal return (before accounting for inflation). Inflation risk is particularly significant for long-term investors.

Maturity risk

Bonds with longer maturities generally carry more risk and price volatility compared to shorter-term bonds. For example, lending money for ten years poses a greater risk than lending it for only a month.

Market risk

This represents the inherent non-diversifiable risk present in any securities market. When you own stocks, the primary risk you face is the potential decline of the overall stock market. i.e. if the market goes down, your stocks are likely to be negatively affected.

There are numerous other types of risk, however these examples outline the most typically identified. The common factor across all risk measures used, is the uncertainty surrounding future outcomes. When talking about risk measures, the most commonly utilised measure is standard deviation. In simple terms, this quantifies the extent to which the annual returns of an investment, deviate from their average.

As a standard across financial investments, in normal circumstances, approximately two-thirds of the values will fall within one standard deviation of the average (mean).

As an example, let's compare two investments with varying risk and return characteristics. Firstly, let’s look at Fund A, which has an expected average return of four percent and an expected standard deviation of two percent. This means that we can expect around two-thirds of the time, this investment is anticipated to yield returns between two percent and six percent, with a range of plus or minus two percent.

On the other hand, Fund B boasts a higher expected average return of 10 percent, however, it also comes with a higher expected standard deviation of 20 percent. Consequently, approximately two-thirds of the time, Fund B is projected to deliver returns between 30 percent and -10 percent, with a range of plus or minus 20 percent.

Clearly, investing in Fund B entails more risk, (or a greater level of uncertainty regarding future returns), compared to Fund A. For instance, an investor in Fund B who needs to liquidate their investment at an unfavourable time would experience a more significant impact if the fund has declined by 10 percent, whereas an investor in Fund A might only face a two percent decline under similar adverse conditions.

The growth of money over time

Imagine two hypothetical portfolios: a low-volatility portfolio and a high-volatility portfolio. Both portfolios have an identical average annual return of 10 percent. However, the low-volatility portfolio exhibits more consistent returns, while the high-volatility portfolio experiences greater fluctuations.

Surprisingly, it’s a mathematical certainty the low-volatility portfolio ends up with a greater amount of wealth. This is because the ending wealth is determined by the compound return, not the average return. Think of the story of the tortoise and the hare. The hare races fast and recklessly, but it’s the steady and controlled pace of the tortoise that ultimately wins the race.

The impact of volatility on returns becomes more significant over time, especially when there's a substantial difference in standard deviation. It’s important to remember that a portfolio that experiences a 50% decline would require a 100% increase in value just to break even.

On the other hand, a portfolio that only suffers an 8.0% decline would only need to recover by 8.7% to make up for the loss. This is because the larger the loss, the smaller the base on which your earnings compound.

asset alo
Expected return

Risk and return are related

Whilst the traditional financial industry often tantalises us with the idea of discovering a "free lunch" or a market pricing anomaly, the reality is that exploiting such opportunities is extremely challenging. In simple terms, there are no investments that offer low risk and high expected returns.

And here is the simple reason why: If an investment were to provide an abnormally high return relative to the risk involved, news of this opportunity would quickly spread, prompting others to seize it as well. Professional investors with very short time horizons and access to top trading technology are likely to access this information far before any retail investor. The resulting surge in demand would quickly drive up the price of the investment until its expected return aligns with other investments of similar risk.

This is the fundamental principle of free markets. Each day, the prices of thousands of publicly traded stocks and bonds worldwide adjust continuously to reflect new information and developments. In the 1970’s, Roger Ibbotson and Rex Sinquefield illustrated this long-term relationship between risk and return in a powerful yet simple way. Their research on historical capital market returns provides us with the intellectual foundation for favouring one asset class over another.

An asset class refers to a collection of similar investment securities that share common and objectively defined risk and return characteristics. 

Small vs. large companies

Growth lines highlight the inherent relationship between risk and return.

For example, small company stocks tend to carry higher risk compared to large company stocks, consequently yielding a higher return.

This is seen in practice when banks are considering interest rates for lending. A bank evaluating lending to a small company versus a well-established entity would naturally charge the small company a higher interest rate due to its greater risk and increased likelihood of loan default.

Equity investors approach risk in a similar manner, demanding a higher rate of return from smaller companies. The outperformance of small company stocks relative to large company stocks reflects a risk dimension known as the size effect. This elevated return serves as a reward for assuming greater risk within a properly functioning free capital market.

It's important to note both small and large company stocks entail higher risk compared to bonds. Hence, it’s unsurprising that both small and large company stocks have generated greater returns than long-term government bonds, which, in turn, have outperformed treasury bills (characterised by lower risk due to shorter maturities). 

While it’s possible for treasury bills to outperform stocks in any given year, it is extremely unlikely over any prolonged period of time. 

As long-term investors, we should look beyond these fluctuations and consider the historical data and investment theory, which strongly suggest the existence of a prevailing risk and return hierarchy over time.

Value vs. growth companies

Another crucial aspect of risk in equity markets is known as the value effect.

Value stocks are characterised by low stock prices relative to their underlying accounting metrics such as book value, sales, and earnings. These stocks often represent distressed companies with limited earnings growth or unfavourable prospects for the future.

On the other hand, growth stocks are associated with highly profitable and rapidly expanding companies, resulting in higher stock prices relative to their underlying accounting measures.

As of the time of writing, many large bank stocks are considered value stocks. While these banks possess significant assets, they also face notable financial challenges. Consequently, equity investors today demand a higher return from large banking stocks to compensate for the increased risk they present.

Dimensions of expected returns

The picture opposite provides a historical (10- year) overview of the return advantage observed in small stocks compared to large stocks, as well as value stocks compared to growth stocks.

Since 1926, small stocks in the United States (as an example market) have shown an average annual appreciation of approximately two percent higher than large stocks, while large value stocks have outperformed large growth stocks by more than one percent.

Dimensions of expected return
Drivers of return

Primary drivers of long-term investment returns

The primary drivers of long-term investment returns in stocks are company size and valuation.

A portfolio that places greater emphasis on small and value stocks is expected to yield a higher long-term return.

The percentage of exposure of your overall portfolio to equities tilted in this manner holds far greater significance in determining your investment returns than the specific individual stocks you select or the money managers or mutual funds you employ.

Long-term investors, who can tolerate the higher short-term volatility associated with riskier asset classes, have the potential to be rewarded over time with higher returns.

It's important to bear in mind that risk and return are entirely interconnected.

What will primarily determine your investment performance?

Contrary to what the financial industry (bankers, brokers and the financial press) may suggest, we know from evidence-based research that success in (1) timing the market, (2) selecting individual stocks and bonds, or (3) identifying top-performing managers or mutual funds actually detracts from the overall return of a diversified portfolio.

These also tend to be time-consuming, costly, and ultimately reduces your return.

It's crucial to recognise the key driver of investment returns is risk, particularly the level of risk associated with the asset classes in your portfolio, and how you allocate your investment funds among them. This decision is known as asset allocation.

An asset class refers to a group of similar investment securities that exhibit common and objectively defined risk and return characteristics. The broadest asset classes encompass cash, stocks, and bonds. Within these categories, specific asset classes exist to capture more specific risk factors. Some examples of these asset classes include the following:

Fixed income asset classes

  • Cash
  • Short-Term U.S. Government Bonds
  • Short-Term Municipal Bonds
  • High-Quality; Short-Term Corporate Bonds
  • High-Quality; Short-Term Global Bonds

Equity asset classes

  • U.S. Large Stocks
  • U.S. Large Value Stocks
  • U.S. Small Stocks
  • U.S. Small Value Stocks International Large Stocks International Large Value Stocks International Small Stocks International Small Value Stocks
  • Emerging Markets Stocks (Large, Small, and Value) Real Estate Stocks (Domestic and International)


Your key consideration should be determining your desired allocation of cash, bonds, and stocks. This decision is the single most important aspect of your investment strategy.


As a general guideline, the proportion of assets allocated to cash equivalents, which are secure and easily accessible short-term investments like treasury bills, bank certificates of deposit (CDs), and money market funds (characterised by low risk and relatively lower returns), should be based on your anticipated timeframe for requiring these funds. Any funds needed within a year should ideally be invested in cash equivalents.

Bonds (lower risk/lower return) and Stocks (higher risk/higher return)

Given that stocks are inherently riskier than bonds, it's logical to expect higher returns from stocks over the long term. Consequently, bonds serve to mitigate the volatility of your portfolio. Therefore, we recommend focusing your bond holdings on higher quality and shorter maturity options, such as short-term treasuries, government agencies, and high-quality corporate bonds. These asset classes are regarded as the safest and least volatile within the fixed-income category.

There are two key reasons why we suggest including bonds in your investment mix:

1. Emotional risk tolerance

During certain years, stock market declines can reach significant percentages, such as 20% or even 30%. Enduring such short-term fluctuations can be challenging, the urge to ‘get out’ is often strong, therefore it's crucial to avoid setting yourself up for failure.

Studies have demonstrated that investors often succumb to panic and sell their investments near the bottom of market downturns, subsequently missing out on the subsequent recovery.

For instance, in 1973 and 1974, a globally diversified stock portfolio would have experienced approximate declines of 19% and 23%, respectively. Investors who panicked and sold likely missed the subsequent recoveries in 1975 and 1976, during which the same portfolio yielded returns of approximately 41% and 28%, respectively.

Similar scenarios unfolded after the market declines in 2000-2002 and 2008. It's essential for investors to assess their emotional ability to tolerate temporary equity downturns.

By appropriately allocating your portfolio to align with your risk tolerance, you are more likely to maintain investment discipline and achieve better long-term returns.

2. Age consideration

Younger investors are better positioned to handle a higher equity allocation in their asset mix. They typically have decades ahead before needing to withdraw funds from their investment portfolio, and their future earning capacity serves as their greatest asset. Consequently, they are generally more resilient to short-term market fluctuations. On the other hand, retirees, who have limited earning capacity and rely on portfolio withdrawals for living expenses, should be cautious about excessive exposure to stocks during potentially extended stock market downturns. For retirees, incorporating more bonds into their portfolio can help mitigate volatility.

In summary

There's a lot to digest and many critical decisions to be made when looking to allocate your assets in the wisest way to ensure a more certain financial pathway lies ahead.

Our team of world-class financial life managers are here to be by your side on your journey and answer your questions to ensure you make the highest quality decisions.


Asset allocation: key points

The most important thing:

You may never have heard of it, but asset allocation is the primary determinant of portfolio returns. Where you tilt your portfolio matters. and will have a huge impact over the long-term.

Watch what they do:

Professional managers understand the importance of asset allocation. In their quest for higher returns, they routinely increase the growth assets in their 'balanced' funds to chase annual performance awards. 

Splitting and timing:

Whilst asset allocation starts with growth and defensive, there can be subtle adjustments made within the overall asset mix. Targeting known factors can potentially increase performance. 

The dollar hedge:

Global assets are exposed to currency moves, there's no evidence hedging will offer a performance benefit, but a 50% hedge will lower volatility. 

Potential outcomes: 

You should understand the potential range of expected outcomes for your portfolio. This includes the best and worst returns. Past performance isn't an indicator of future performance, but it can be a helpful guide. 

Staying on track:

Rebalancing can have potential performance benefits, but its most important function is keeping a portfolio in line with its original construction. 

shift your focus

The Diversification Decision

Once you and your adviser have agreed on the appropriate mix of stocks, bonds, and cash for your portfolio, it's time to shift your focus towards selecting specific asset class building blocks.

Whilst many people understand the importance of not putting all their eggs in one basket, effective diversification is often misunderstood.

A classic example of this was during the late 1990s technology (Tech) bubble. An executive heavily invested in a single tech company attempted to diversify by purchasing shares in 10 other tech companies. Believing that staying within the familiar tech industry was a smart move, they hoped to achieve diversification. However, when the technology stocks collectively crashed due to shared risk factors, their wealth suffered significant damage.

The true benefits of diversification become apparent when an investor considers the relationship between each asset class in their portfolio.

Some asset classes tend to increase in value when others decline or at least experience less severe downturns. Asset classes that move in sync, such as companies within the same industry or those sharing similar risk factors, are what we call, positively correlated.

Assets that move independently are considered uncorrelated, while those that move in opposite directions are negatively correlated.

The advantage of blending hypothetical asset classes

The picture opposite shows the advantage of blending three hypothetical asset classes that exhibit negative correlation. Asset A possesses distinct risk and return characteristics compared to asset B, causing their prices to move in opposite directions. When A experiences a decline, B rises, and vice versa.

The diversified line below represents a blended portfolio that equally holds both assets. This blended portfolio exhibits lower volatility (i.e., lower standard deviation) than either individual asset.

This concept is a fundamental aspect of Modern Portfolio Theory, coined by Nobel Laureate economist Harry Markowitz in 1952. Although Markowitz initially introduced the idea using individual stocks, it's equally applicable to mutual funds or even entire asset classes.

Diversification smooths out some of the bumps
Portfolio diversification 5 decisions

Focus on overall performance

This concept highlights another crucial principle of investing: focus on the overall performance of your portfolio, rather than the individual returns of its components.

It's important not to be disheartened if certain asset classes underperform in a given period.

When considering the specific asset classes to include in your portfolio, it's recommended to have a discussion with your advisor to explore a wide range of options. For example, real estate investment trusts can serve as a valuable diversifier when combined with traditional equity asset classes.

International stocks should also be a part of the diversification discussion. It's important to note that the U.S. stock market represents less than half of the global equity market value, offering numerous investment and diversification opportunities beyond domestic borders is advantageous. With advancements in technology, professional money managers now have up-to-the-minute information on global developments and the ability to swiftly allocate billions across different markets. Consequently, the long-term expected returns of international asset classes are similar to those of comparable domestic asset classes.

Diversification benefits

In the short term, the performance of international asset classes can differ significantly from domestic asset classes. There are times when international investments can outperform a domestic market, and other times when domestic can perform better. This variation is primarily influenced by different countries and regions being at various stages in their economic cycles, experiencing fluctuating exchange rates, and implementing independent fiscal and monetary policies.

To maximise the diversification benefits of international investing, it's recommended to include international small-cap and value stocks, as well as securities from emerging markets. The stocks of these developing countries are particularly valuable for diversification because their prices tend to be more closely tied to their local economies rather than the global economy. On the other hand, large international companies, such as Nestlé, for example, which has operations worldwide, tends to have higher correlations with other large companies both domestically and abroad.

When it comes to domestic bonds, it's important to remember that their role is to reduce overall portfolio volatility. For bond investments, it's advisable to focus on higher-quality issues (bonds with higher credit ratings) and those with shorter maturities (less than five years) as they effectively mitigate risk. These types of bonds are safer, more liquid, and exhibit lower volatility.

Similar to international stocks, international bonds can serve as excellent diversifiers for your portfolio. Just like domestic fixed income, it's recommended to consider shorter maturities and higher-quality issues. Creating an international bond portfolio that combines domestic bonds with bonds from other developed countries can potentially lower risk and offer greater expected returns compared to an all-domestic bond portfolio.

Use asset classes

With the aid of advanced computer programs available today, an adviser can analyse the historical risk and return data of various asset classes and design a portfolio that maximises expected returns based on a specific level of risk. 

It's worth noting that as the initial exposure to the stock market (up to approximately 20%) is added to a portfolio consisting entirely of bonds, the overall risk level decreases.

This reduction in risk is attributed to the diversification benefits derived from incorporating riskier assets that do not move in perfect correlation with the other assets in your portfolio.

Determining the appropriate level of risk for your portfolio is a collaborative decision between you and your adviser.

It's important to assess your individual risk tolerance and financial goals to establish an appropriate risk profile.

At AES, we have a robust and collaborative process we work with all our clients on to assess your financial goals and risk tolerance with the aim to create a more certain financial pathway ahead.


Diversification: Key points

Knowledge, success or longevity is no substitute: 

Many investors ridicule diversification, believing their skills or investment history have shown they're beyond such a quaint concept. This is arrogance/overconfidence masquerading as foresight. They're not immune to calamity. 

The wipe out: 

Companies can and do fail. They may have the benefit of regulators offering a clean bill of health and lawyers attacking critics. It's cold comfort on the day of failure, when a company tumbles 90%. 

Diversification may not be what you think:

Self-directed investors often devise their own versions of diversification. Whilst they understand the general concept, they've usually done little to effectively diversify or lower their risk. And diversification is not buying two investment properties instead of one.

Lower volatility:

Having uncorrelated assets within a portfolio helps to lower volatility, can help to improve returns, and make your wealth compound faster. 

View your portfolio as a whole:

Looking at last year's or last month's best performer will only serve to frustrate you. Last year's best may be this year's worse and vice versa. View the total return and measure it against your goals. 


Judicious portfolio construction ensures assets aren't crossing over each other. Using funds with similar characteristics lowers diversification. 

Diversification doesn't eliminate risk:

At some point it won't matter how much you've diversified, there's a threshold where risk still exists. No investor can escape it. 

a key decision to make for your investing journey

The Active versus Passive Decision

What's the difference between active and passive managers, and why is it a key decision to make for your investing journey?

Active investing

Active managers employ various techniques like stock picking and market timing in an attempt to surpass the market or their respective benchmarks. In contrast, passive or systematic managers adopt a longer-term perspective, avoid subjective forecasts, and strive to deliver returns that align with the market.

The Efficient Markets Hypothesis states that, except by chance, no investor can consistently outperform the market over extended periods. Active managers constantly test this hypothesis as they seek to outshine their benchmarks and achieve superior risk-adjusted returns. However, the overwhelming evidence indicates that their endeavours are largely unsuccessful.

Crystal ball

Academic evidence suggests successful investors do not try to predict the future.

They resist the sway of the media and do not act upon impulse or emotion. Instead, they focus on what they can control:

  • The creation of an investment plan that fits your life needs and risk tolerance
  • The structuring of a portfolio along the dimensions of expected returns
  • Global diversification - Management of expenses, turnover, and taxes
  • Discipline through market swings and dips

The pursuit of outperformance

Active managers strive to outperform the market or a benchmark index by constructing portfolios that differ from the market composition. They believe that superior analysis and research can help them achieve this goal. Some managers focus on fundamental factors like accounting data or economic statistics, while others employ technical analysis using historical price charts, trading volume, and other indicators, assuming they can predict future price movements.

In their pursuit of outperformance, active managers often concentrate their investments in a select few securities they believe will be top performers. However, this approach sacrifices diversification and complicates the use of active strategies to accurately capture the returns of a specific asset class or manage overall portfolio allocation. Studies have demonstrated that active managers' returns can significantly deviate from their benchmarks, with their portfolios frequently overlapping across multiple asset classes.

Active managers employ two primary methods to outperform the market: 

  1. Market timing
  2. Security selection
Market timing involves trying to predict future market price movements and adjusting investments accordingly. However, due to the inherent difficulty in reliably forecasting the future, substantial evidence suggests that market timing is an ineffective strategy.

Market timing

Another reason why market timing is challenging is that markets often experience bursts of substantial gains or losses that occur within a limited number of trading days.

Missing just a few of the best-performing trading days can result in a highly significant loss of the market's overall returns.

We firmly believe that it's impossible to predict in advance when these best or worst days will happen.

Avoid market timing

Security selection

Another active management technique is security selection, also known as stock picking. This approach involves trying to identify securities that are incorrectly priced by the market, anticipating that the pricing error will eventually rectify itself, resulting in superior performance. Taking the world of Wall Street as an example, active managers classify securities as undervalued, overvalued, or fairly valued. They purchase securities they believe are undervalued, considering them potential "winners," while selling those they deem overvalued, considered potential "losers."

It's important to recognise that every time you buy or sell a security, you are essentially placing a bet. You're trading against the perspectives of numerous market players who may possess more information than you do. In an efficient market, all available information is reflected in the market prices, which means your bet has roughly a 50% chance of outperforming the market (and even lower once costs are factored in).

Once again, the industry of finance and the media have a vested interest in promoting the notion that we can outperform the market by simply being more intelligent and putting in more effort than others. However, with the advent of modern technology, information is easily accessible and swiftly incorporated into securities prices. The functioning of markets relies on the fact that no individual investor can consistently make profits at the expense of others.

The concept that prices accurately incorporate all the knowledge and expectations of investors is referred to as the Efficient Markets Hypothesis in academic circles. This hypothesis was formulated by Professor Eugene Fama of the University of Chicago Booth School of Business.

The Efficient Markets Hypothesis is sometimes misunderstood as suggesting that market prices are always correct. However, this is not the case. While a well-functioning market may occasionally misprice assets, these errors occur randomly and unpredictably, making it impossible for any investor to consistently outperform others or the overall market.

Despite this, many investors still hold the belief that they can beat the market by identifying a smarter, harder-working, and more talented manager—a financial equivalent of Roger Federer or Michael Jordan. It's often easy to identify top performers after the fact, and they are hailed as "geniuses" by the media. However, the challenge lies in identifying tomorrow's top managers before their impressive performance.

The most common method employed is analysing past performance, (if good past performance indicates good future performance). Financial magazines like Forbes and rating services such as Morningstar capitalise on this data as it drives sales. Mutual fund companies also advertise their best-performing "hot funds" to attract new investors. Despite all these efforts, there's little evidence to suggest that past performance reliably predicts future performance.

Passive investing

A more rational approach to investing is passive investing, based on the belief that markets are efficient and exceedingly difficult to outperform, especially when considering costs. Passive managers aim to replicate the returns of a specific asset class or market sector by broadly investing in all or a significant portion of the securities within that target category.

The most well-known method of passive investing is indexing, where a manager purchases all the securities in a benchmark index in the same proportions as the index itself. The manager then tracks or replicates the performance of that benchmark, minus any operating costs. The S&P 500, consisting of 500 large-cap U.S. stocks representing approximately 70% of the U.S. stock market's total market capitalisation, is the most popular benchmark index.

Cash drag

Active managers, on the other hand, often hold more cash on hand as they continuously search for the next winning investment opportunity. However, this approach can result in lower returns since the returns on short-term cash investments are typically lower than those of riskier asset classes like equities. Passive managers, by being fully invested, ensure that a larger portion of the invested capital is consistently working for the investor.


Another advantage of passive investing is the ability to select a group of asset classes that complement each other, acting as efficient building blocks for a portfolio. These building blocks should have minimal overlap in securities (cross-holdings) and possess distinct risk and return profiles.

Active managers may sometimes change their investment style in an attempt to beat their benchmark, for example, by shifting from large-cap value stocks to large-cap growth stocks if they anticipate the latter will perform exceptionally well. However, this "style drift" can create issues, especially when there's already a large-cap growth fund in the portfolio, leading to overlapping risks and reduced diversification. Relying on active managers for portfolio construction relinquishes control over diversification decisions.

Costs matter

One explanation for the underperformance of active management, as put forth by Nobel Laureate William Sharpe of Stanford University, is that active managers, as a group, will always lag behind passive managers. This is because, collectively, investors cannot earn more than the total market return, and active managers face higher costs due to trading and research expenses. Consequently, the return after costs for active managers as a group is expected to be lower than that of passive managers.

This applies to every asset class, including supposedly less-efficient ones like small-cap and emerging markets. Contrary to conventional wisdom, Sharpe's observation confirms that active managers should collectively underperform by a greater margin in these markets due to their higher costs.

The higher costs associated with active management can be categorized into three areas:

1. Manager expenses

Active managers face greater expenses in employing high-priced research analysts, technicians, and economists who are constantly searching for promising investment opportunities. Additional costs of active management include fund marketing and sales expenses, such as 12b-1 fees and loads, aimed at attracting investments from individuals or persuading Wall Street or City brokers to promote their funds. The difference in expenses between active and passive investment approaches can exceed 1% per year.

2. Increased turnover

Active managers, in their pursuit of superior returns, tend to engage in more frequent and aggressive trading compared to passive managers. This results in higher brokerage commissions, which are passed on to shareholders as reduced returns. Moreover, market-impact costs can rise significantly. When an active manager is motivated to buy or sell, they may have to pay a premium to execute transactions swiftly or in large volumes (like motivated buyers or sellers in real estate). These higher market-impact costs are more common in less liquid market segments like small-cap and emerging markets stocks. Turnover in actively managed funds often surpasses that of index funds by a factor of four or more. The additional trading costs for active management can exceed 1% per year.

3. Greater tax exposure

Active managers' more frequent trading activities result in accelerated capital gains for taxable investors. When a mutual fund sells a security at a profit, investors may receive taxable distributions. For securities held longer than one year, the long-term capital gains rate applies, while short-term capital gains rates apply to securities held for less than a year. The additional taxes resulting from accelerated capital gains generated by active managers may exceed 1% per year.

It's crucial to note that, typically, only manager expenses are disclosed to investors among these three categories. These expenses are usually expressed as a percentage of net asset value in the case of a mutual fund and are referred to as the fund's operating expenses. For actively managed equity funds, the average operating expense ratio is around 1.3% per year. In contrast, passive funds often have significantly lower costs, often below 0.5%.

If the additional costs of active management amount to approximately 2-3 % annually, active managers face a substantial challenge to merely match the performance of a passive alternative like an index fund.

The evolution of investment science

Over the decades investment science has evolved just like technology.

If traditional active funds were a Blackberry Phone, Index Funds represent the iPhone. Systematic funds now represent the iPhone 14!  

If you want to get better returns then it makes sense to use the most up-to-date methodology to do this.

At AES, as the only fee-based planning firm within the GCC as well as the only CEFEX certified Fiduciary within Asia, the Middle East and Africa (AMEA), we have a duty of care to provide you with unbiased and transparent advice.

Average expected annual equity returns

Active vs passive: Key points

Remain optimistic:

Just over 100 years ago, your ancestors traveled by horse and cart. Today your car is on the verge of driving itself. That progress (human ingenuity) is continually reflected in capital markets. 

Markets do fall:

Markets are priced daily. This is not something to be feared. It should be acknowledged and accepted. Tumbles are eventually accompanied by a recovery. 

Active managers are not worth the cost:

You may find the unicorn, but it's very unlikely (and attributable to luck). Prior outperformance is unlikely to persist over long periods. 

Fees matter:

It's simple maths. Higher fees associated with Active Managers are a drag on returns. 

Past performance:

Form means little. A manager's results from last year are just that, something that happened last year. Chasing winners will amount to costly frustration. 

Markets reflect all known information:

The incredible efficiency of markets is reflected in prices almost instantly. Any edge you can think of is likely already priced in. 

The best starting point:

Systematic index funds are the place to begin and represent a paradigm shift within the investment world like Blackberry phones to the iPhone in wider society.

an important factor in improving your long-term returns

The Rebalancing Decision

Rebalancing a portfolio between equity and fixed-income exposure is an important factor in improving your long-term returns. If you accept your risk capacity should be matched with a suitable portfolio then rebalancing is the means by which you maintain a consistent risk exposure.

For example, after a prolonged bull market the balance of equities and fixed income in your portfolio might have shifted from 60/40 to 70/30 – leaving you more exposed to the downside than you are prepared for.

Although rebalancing is a simple concept, realising its benefits is a challenge for many investors because it involves selling assets that have recently done well and buying assets that have recently done poorly in order to return to the original allocations.

However, an understanding that, over the long term, asset class performance tends to revert to the mean (i.e. periods of above-average performance are followed by periods of below-average performance), rather than maintain upward or downward trends indefinitely, will help the investor overcome
his reluctance to do what appears to be counter-intuitive – i.e. sell a successful
investment rather than hold on to it.

Rebalancing has been proven to increase portfolio returns with no additional cost in terms of risk.

However, it's not an entirely ‘free lunch’ as, in order to rebalance, some transactional fees and expenses may be incurred. The key, then, is to maintain discipline as to when and why the portfolio will be rebalanced.

Many indices rarely rebalance

As a general rule, a portfolio is tested regularly and rebalanced when necessary to revert to its original allocation. In addition, your risk capacity should be assessed regularly or when a significant life event occurs such as loss of job, marriage, divorce, birth of children or death, to determine whether any structural change in asset allocation is required.

It may come as a surprise to note a rebalanced portfolio typically achieves higher average returns of 0.88 percent per year. This difference is significant and attributed to the fact a rebalanced portfolio doesn't experience as much decline during unfavorable market periods.

By staying aligned with its target allocations, it avoided accumulating excessive exposure to asset classes that performed poorly.

Speak to one of our advisers to find out how we can ensure you can create a successful rebalanced portfolio to achieve your goals. 

Final thoughts

People tend to do what they've always done.

Voters pick parties they've voted for in the past. Families go back to the same holiday spot every year, and companies are wary of starting new initiatives, but loath to kill off new ones.

The reason? Inertia.

We hope the above questions help overcome our resistance to change and pave the way for courageous conversations about how to catalyse your future. It's a privilege to help guide you and we take the responsibility articulated below extremely seriously. 

“The money I've entrusted with you represents years of hard work and sacrifice.  Your actions will impact this family for generations. It will not only will be long-term business for you but the opportunity for my children and their children’s education and well-being are in your control. Please don’t let us down”.

Please don't hesitate to contact us if you want to discuss any of the questions above in more detail.

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