Investment success results from strategy that matches a client’s objectives, and discipline along the way. We believe that portfolio construction is never “one size fits all”; experience has shown that clients can achieve objectives in many ways, with differing asset allocations. For portfolio construction purposes, Canterbury classifies assets into three categories:
- Growth assets, which include public and private equities. In general, almost every portfolio has equity investments, which provide the best way to achieve long-term growth. Public equities represent the liquid form of growth capital compared with private investments, which play a similar role but with the expectation of superior performance, to compensate for their illiquid nature.
- Capital preservation assets, which include fixed income, hedge funds, and cash. Of the three categories, this may be the most difficult to navigate in today’s climate, because interest rates are expected to increase and investors continue to show less appetite for hedge funds. As a group, capital preservation assets provide broad protection from equity market risks and market downturns. Fixed income and hedge funds go about such objectives in different ways, but can both serve a role if properly balanced and diversified.
- Inflation-protection assets, which include liquid real assets, commodities, and real estate (both liquid and illiquid). The assets in this category provide long-term protection during rising or rapid increases in inflation. While many clients already have real estate exposure, there are liquid investments that can further diversify a portfolio and provide broad insurance against periods of higher inflation, an increasing risk in today’s investment climate.
Not all asset classes belong in every portfolio. We work with our clients to educate and guide them as we develop a customized portfolio that meets their unique needs and goals.