New portfolio solution to avoid 'nasty surprises'

portfolio management

1 June 2015
| By Nicholas |
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Melbourne-based boutique advice group, DFS Advisory, is offering its new portfolio management service to help advisers avoid "nasty surprises".

DFS Advisory principal, Stephen Romic, said investment portfolios should do what they say they do and perform how they are supposed to.

Romic said the group developed its proprietary risk-based mutli-manager portfolios through DFS Portfolio Solutions, following the global financial crisis (GFC) in 2009, when the portfolio risk of many superannuation and investment funds exceeded the risk tolerance of investors.

"We're bringing our capabilities to market because many investors and advisers believe that their portfolios are being actively-managed in accordance with their risk tolerance, but that's not always true," he said.

"Conventional portfolio management keeps the strategic asset allocation more or less constant and permits portfolio risk to vary irrespective of changing market conditions. In contrast, we change the asset allocation when we observe meaningful changes in market conditions to better stabilise portfolio risk.

"Better risk management improves portfolio outcomes and this is central to our investment process.

"The risk in a traditional managed portfolio can fluctuate by a considerable amount. This occurred during the GFC when many supposedly balanced options lost some 25 to 35 per cent.

"To help investors and advisers avoid such nasty surprises, we established DFS Portfolio Solutions and built an investment process where we explicitly control portfolio risk."

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