LATEST FACTSHEET: BLACKWOOD factsheet model 3 September 2020
Every investment can be described in terms of the amount of risk associated with it. Higher-risk investments tend to experience greater volatility, which means they are likely to go up and down in value more often and by larger amounts than lower-risk investments. In return, higher-risk investments have the potential to produce higher returns over the long term, although this is not guaranteed.
For example, investments such as cash deposits and bonds issued by the UK Government (known as gilts) are considered low risk. UK commercial property, corporate bonds issued by UK companies as well as other types of global bonds issued by overseas governments and companies are considered medium risk. In the case of global bonds, generally those which pay a higher income are riskier than those which pay a lower income level. Shares in companies in the UK and other developed markets are considered high risk, while shares from companies in emerging markets are considered very high risk. You can reduce the overall risk in a portfolio by using ‘diversification’ – in other words, spreading your money across different investments. By doing this, you can match your overall portfolio to the level of risk that is right for you.
It’s important that your investment portfolio matches your willingness and ability to take investment risk. A ‘low’ risk profile shows that your willingness and ability to accept investment risk is below average. Any falls in the value of a portfolio that matches this risk profile should usually be small. However, potential returns are also likely to be modest. So if inflation (the rate at which the prices of goods and services rise) is higher than the rate earned on the investment, the spending power of your money will be reduced.
A target portfolio for this risk profile is most likely to contain mainly low-risk and some medium-risk investments, including cash, government bonds, UK corporate bonds, global bonds as well as UK commercial property. It will also be expected to contain some high-risk investments such as shares, held mainly in the UK but with smaller amounts in other developed markets as well as other higher-risk investments. As a result, you should always check that you are comfortable with what’s included.
Blackwood manages the models on a discretionary basis. This page gives an indication of the type of funds we will use to meet the strategic (long term) asset allocation.
The actual asset allocation at any time and for an extended period of time may differ significantly from this strategic asset allocation, reflecting the dynamic investment and market conditions.
The alternatives asset class includes assets such as: private equity, VCTs, and infrastructure. Current market conditions, however, have led Blackwood to elect not to invest in these assets at this time.