4 Ways to Strengthen Your Portfolio
Every investor aspires to work with a portfolio that is resilient. A strong portfolio is capable of delivering superior long-term returns, weathering volatility and managing financial risk. You could strengthen your portfolio by the following 4 ways:
1. Focusing on Asset Allocation
“Most things prove to be cyclical.” – Howard Marks
Asset allocation is key to return generation and risk management. The markets work in cycles. At any point in a market cycle, one asset is much loved, while another loses favour. Through appropriate allocation, a well-rounded portfolio will be able to generate returns throughout a cycle and will be insulated from financial risk.
2. Finetuning Your Portfolio
“Know what you own and know why you own it.” – Peter Lynch
It’s important for every investor to understand the composition of their investment portfolio. Markets are dynamic. With an evolving context, regular and timely reviews allow the portfolio to be oriented towards future performance. Every investment decision should be well-informed and tied to a purpose.
3. Following A Contrarian Approach
“It is impossible to produce superior performance unless you do something different from the majority.” – John Templeton
Following a contrarian approach is difficult but rewarding. It demands a thorough understanding of the market context and investment opportunity. Contrarian investments need appropriate safeguards and regular review. An edge is created by identifying investment opportunities before the market realizes its true potential.
4. Assessing Quality
“The individual investor should act consistently as an investor and not as a speculator.” – Ben Graham
Quality should always be central to every investment decision. At the end of the day, an investment is meant to fulfil your wealth creation aspirations. The purpose is to have your money working steadily for you.