Rethinking asset allocation

Asset allocation has become one of the talking points for many investors and advisers following the poor performance markets, partly international shares over the past three years.

Is tactical or strategic asset allocation the right way to go? Or as some people are now pondering maybe there is somewhere in the middle which should be used – dynamic asset allocation.

Rob Keavney CFP, of Centrestone Wealth Management, told delegates at the Financial Planning Association of Australia’s conference in Adelaide earlier this year.that asset allocation should be more dynamic.

Advisers should look for long term trends – such as the run up in value of the United States market over during the late 1990s – and make appropriate portfolio adjustments.

Likewise, the people who run the ACC funds in Wellington say they have bettered mainstream fund managers by taking a more open approach to their investment decision making.

One of the portfolio managers, Nicholas Bagnall, says that ACC has done well by "avoiding common pitfalls of fund managers and being willing to acknowledge our mistakes."

He says the fund is "very careful" with its allocations and doesn’t get hung up on benchmarks.

Also ACC tends to "tactically manage" around the benchmarks to get results.