At Implemented Portfolios we believe that being active with the asset allocation in a portfolio is far more important than being active in security selection or stock picking. Research supports this view, verifying that the allocation within a portfolio to the underlying asset classes, including regions, countries and industry sectors, is the main differentiator of portfolio returns.


Our philosophy toward asset allocation focuses on long-term return forecasting compared to a risk-free return, such as government bonds or term deposits. If returns are forecast to be lower than can be achieved without taking any risk, we believe the correct asset allocation decision is to start reducing exposure to that investment, and to sell down completely when prices become very overpriced.


When we forecast investment returns we are looking forward 10 years, and we accept that over shorter time frames our views can diverge from the prevailing consensus and from actual market outcomes.


A client’s portfolio is invested by allocating it across these broad asset classes:

Australian Equities

International Equities

Listed Property

High Yield Income Securities

Defensive Income Securities


The different characteristics of each asset class will have a significant impact on the performance of a client’s portfolio. Good diversification is important in responsible investing, as specific asset classes will perform differently as market conditions change over time. However, having a diversified portfolio and dynamically managed asset allocation, increases the opportunity to improve the long-term performance of a client’s portfolio.

Knowing which asset class to choose and how much to allocate is a complex process. It is also important to monitor the performance and outlook of each asset class and make adjustments to keep a client’s portfolio on track with their objectives.

Date of production: February 2021

Most portfolio managers use a quite static approach to managing asset allocation, which is to say that the exposure to underlying asset classes like bonds and shares remains essentially fixed. At Implemented Portfolios we believe it is essential to be dynamic in managing these exposures on an ongoing basis.


Asset classes from time to time become cheap or expensive relative to their underlying fundamental value. Dynamic Asset Allocation seeks to identify these valuation anomalies, and to adjust portfolios to favour what looks cheap and to reduce those that are expensive. Avoiding buying when assets are overpriced is essential in long-term portfolio risk management.


To learn about the Implemented Portfolios Asset Allocation and Investment Committee, click HERE.

We recommend you speak to your financial adviser or seek independent financial advice to determine whether this is suitable for you.

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