A new approach to portfolio construction

TECHNICAL

Ed Farrington, managing director, global key accounts, at Natixis Global Asset Management, explains how putting risk first can help build a durable portfolio in today's market conditions.

Today we are faced with a very different market environment to that of 1952 – the year that brought us Modern Portfolio Theory. Since then capital markets have grown increasingly sophisticated and UK demographics have changed considerably. Investors are facing new challenges at the very moment they are looking toward the distribution phase of planning. Add in the on-going effects of the global financial crisis, and these factors demand a re-think of fundamental portfolio construction. With a recent NGAM survey of UK advisers finding that over 70% of investors were conflicted between p...