The Risk Decision Of Online Portfolio

Misunderstanding one : debt is equivalent to safety

The fact is : the security of bonds varies

Until recently, the U.S. Treasury was seen as a zero -risk products , people think of the issuer ( ie Uncle Sam ) is absolutely impossible to repay the money . After the downgrade of U.S. Treasury bonds , investors may be able to recognize rising to a higher level, to see no matter what bonds are hidden risks. Investment advisers say , the status of the bonds in the portfolio still can not be denied , holding bonds usually to generate revenue and to ensure stable ─ ─ investments when stocks fell , bonds usually rise, at least not like the stock decline so much . However, differences in the level of risk bonds is large, the probability of occurrence of large losses of some bond debt is much larger than the other . Please note: The higher bond yields , the greater the risk . For example, high-yield corporate bonds ( generally referred to as “junk bonds ” ) yields an average of 6.6 percentage points higher than U.S. Treasuries , the risk of default they should be higher.

Positive Solutions: Do not pursue high- income

Even if the investment in high -yield bonds , money or larger than the probability of losing money some, but such bonds fluctuated more similar ups and downs and ups and downs of the magnitude of the stock price , and as smooth unlike bonds. To reduce the risk , the proportion of investors in the bond portfolio of high -yield bonds should not exceed 7% of the portfolio should be diversified , which requires both high-yield bonds , but also the configuration of municipal bonds, investment grade corporate bonds and foreign bonds . In addition, ( bond value will shrink ) , Florence recommended investment horizon is shorter stick bonds ( 7 years or less ) , as against the interest of investors can not control the rising risk of such bonds when interest rates rise minor damage .

Myth two: think you have enough to diversify the investment portfolio

The fact is : hold a dozen fund ( or both hold stocks and bonds ) is not necessarily equal to investment diversification

2010 data show that households invest in mutual funds held by the average household of seven funds . This can be enough , diverse enough , right ? But that is not the case, a closer look will find that even holds a large number of funds, portfolio concentration may still be much higher than you initially thought . Investors often do not realize they may hold two or more very similar investment strategy fund , a fund ‘s name or investment history does not always reflect its investment strategy. For example, the S & P data show that $ 61 billion AUM Fidelity contrarian fund (Fidelity Contrafund) with assets under management of $ 24 billion T. Rowe Price Growth Stock Fund (T. Rowe Price Growth Stock) of The main investment objective is iT stocks and consumer discretionary stocks , while investors holding these two funds is actually double down on these two categories of shares .

Meanwhile, headquartered in a number of varieties to invest in assets such as stocks and bonds, the general mainstream managing director of Bethesda, Maryland (Bethesda) wealth management company Absolute Investment Management Robert mouth维德默(Robert Wiedemer) said there product trend boost portfolio performance unsatisfactory , but too many investors are confused them to ignore it. He said he will be configured by the customer ETFs portfolio of about 20 % of its assets to gold and silver , when stocks fell, gold and silver are often able to remain strong . Investment Advisor certification bodies nonprofit Certified Financial Planner Board of Standards Consumer Rights Commissioner Eleanor mouth Blaney (Eleanor Blayney) said that in the occasion of the weak U.S. economic growth , expanding overseas stock exposure may be a wise choice.

Positive Solutions: Lift the veil and see the true face of the Fund

Bruce Rosen said investors should look at what their own mutual fund investments held in the end , pay attention to whether there were repeated industry or company name. He said that a fund should be listed on the website of the fund ‘s top 10 holdings and investment industry distribution .

Three Stages Of Online Portfolio

Online Portfolio construction process is composed by the following steps .

First, you need to define the range suitable for the selected securities . For most investors plan to focus their attention on common stocks, bonds and money market instruments of these major asset classes . Currently, these investors have put such as international equities, non- dollar bonds are also included in the alternative asset classes , making the global nature of the investment . Some of the real estate and venture capital investors also absorbed into further broaden the scope of investment. Although the number of asset types is still limited, but the number of securities in each asset class may be quite substantial. For example , common stock equity managers generally operate at least 200 species, which averages between 400 ~ 500 species, while others are as high as 1000多种even more.

Secondly , the requirements of the expectations of potential investors need to return the individual securities and asset types and exposures . In addition, more importantly for this estimate to be clearly stated so that the comparison between what many attractive securities and asset type. Investment value of the portfolio formation depends largely on the quality of these selected securities. Pointed out the importance of this stage , we calculate the risks described later in securities and asset types – the rate of return expectations pricing models and techniques .

Portfolio construction process of the third stage , the actual optimization, the weight must include all securities within the portfolio selection and determination of various securities . In the process of collection of the various securities together to form the required combination , not only necessary to consider the risks of each securities – the rate of return characteristics , but also to estimate the interaction of these securities over time that may arise. As we noted, horse test Markowitz model and practice with the objective way to determine the optimal portfolio provides a conceptual framework and methods of analysis .

Six Tips Of Online Portfolio


Markets remain volatile , the risks highlighted. When selecting financial investment funds , adhering to the ” pile of eggs in baskets ” concept , preferably fund portfolios do more to help you resist risks . Fund portfolio which should combine their life cycle , risk tolerance and investment horizon rather than just all types of investment funds , balanced risk management, enhance the stability of the investment , so that the Fund can invest in various stages of obtaining better returns , but not simply the sum of the accumulated equity funds .
So, how should investors choose funds as their online portfolio do ?

Investment Philosophy

Many investors blindly follow the market , others traded fund , which funds the biggest gainers on the chase to buy only what , there is no margin of safety in the first place the funds . Before recommending the stock market , a good school and a school fund financial literacy , weigh their risk tolerance , and understanding of economic trends or trends in the state, and then hold investment strategy.


Various types of equity funds have their own characteristics , each with its own characteristics. If you are in the accumulation stage of life , we must invest in the future buyers , children school fees , then you preferred growth equity fund based; If you are in the distribution phase of the life cycle , both for the children to go to school , but also their own pension , then you choose Equity income Fund (the value Fund ) based. In short , we must clearly achieve the desired objectives , adhere to continuing to invest in their own funds portfolio holders .

Core portfolio

Your portfolio should be a core part of what mainstream fund composed ? I very much agree with equity investments “core – satellite” strategy in the investment fund is also applicable. You should stock funds ( active , partial equity , balanced ) to choose their own , outstanding performance and stability constitute the core fund of funds portfolio . 80% of the young can you fund portfolio funds can be accounted for 40% of elderly – 50% , another 10% defensive investment funds ( bond funds and money funds ) , with 10% invested in the market, excellent performance for your satellite funds, to obtain higher returns.

Index Funds

” Index funds do not invest your fault .” To borrow the words of Warren Buffett to guide their investment skills. The current market has proved his experience. Thus, in each portfolio , you should have one – two stock market index funds. Such as Castrol 300 and small plates ETF, which has a whole market approach may well be a wise approach.
Fund Portfolio

Despite the different names of the funds , but note that “no matter how thin cut , sausage or sausage pieces also .” Would do the same type of fund portfolio is invalid. If you hold only a few too many similar funds , will make your portfolio imbalance unknowingly let you enlarge the market risk , hindering achieve your investment goals. Effective fund portfolio should be of different types , such as different types of equity ( active type , partial shares and balanced ) , bond , currency type.


Market share in 2005, experienced a change, boosting the performance of the fund doubled , in large part can be said that the market share reform before compensatory growth . This performance in mature markets can not be met . Investors should reduce the investment income on the market. For our emerging markets , the expected revenue is about 30% adjustment on the line.

Online Portfolio And Fund Investment

For working people , the most simple way is to finance investment funds , and this ” lazy banking law ,” it has become more popular . Money is not the exclusive rich , as long as the heart, there is an unexpected harvest.
Clear Online Portfolio “eight bogey .”

For the online portfolio should have ” eight bogey ” : no clear investment objectives, there is no core portfolio , excessive non-core investments, portfolio imbalance, too much the number of funds , the cost level is too high , there is no standard set sold , similar fund options improper .
Establish core online portfolio

First , investors should determine according to their risk tolerance of a clear investment goals, and then select three to four stable fund performance , constitute the core portfolio , which is the major determinant of long-term performance of the entire fund portfolio . Market balanced fund is suitable as a core portfolio of long-term investment goals , as the core portfolio of short-term investment objectives , short-term and medium-term volatility of the larger funds are more suitable.

Investment income increased diversification

Secondly, in addition to the core portfolio , we might buy some of the sector funds , emerging market funds and investing in a large number of stocks or industry fund to achieve investment diversification and increase revenue across the portfolio . Small-cap funds also fit into the non-core portfolio , because of its large market volatility than funds of . For example core portfolio is market fund , with non-core is small cap fund or sector funds . However, these non- core portfolio of the fund also has a higher risk , so be careful to limit them to avoid too much impact on the entire fund portfolio .

Focus on risk diversification

Investment saying: do not put eggs in one basket , a lot of people understand , the meaning is to spread the risk . It should be emphasized that the number of the degree of dispersion of the entire online portfolio, important than the fund . If the investor holds the fund is focused on growth-oriented investments in a particular industry or even more number of funds , did not achieve the purpose of risk diversification . On the contrary , one covering the entire stock market index fund portfolio and more than likely constitute more funds diversify risk .

In addition , the performance of the online portfolio of each fund , investors should regularly observe its risks and benefits are compared with similar funds and will consider replacement. This can also spread the risk to some extent.

What is Online Portfolio?

Online Portfolio: Some stocks, bonds held by the investors or financial institutions , derivative financial instruments and other components of the collection . The purpose of the online portfolio is to diversify risk .

Two levels of the Fund’s online portfolio
The first level is a combination between stocks, bonds and cash and other assets , that is, how proportional allocation among different asset ; second level is a combination of a combination of stocks and bonds , that is, in the same asset class in choose which of several varieties of bonds and stocks which several varieties and their respective weights is. Portfolios
Investors put a certain percentage of funds invested in a number of varieties of different types of securities or securities of the same type , which is decentralized investment portfolio . You can spread the risk by investing in a combination , that “can not put all your eggs in one basket “, which is one meaning of the securities investment fund established .

In order to protect the interests of investors , investment funds must comply with the principles of portfolio investment , even a single market funds can not buy just one or two securities. Some funds on the terms expressly provides that the portfolio is not less than 20 varieties, and each of the securities purchased , there is a certain percentage limit . Investment funds add up, so has the power to disperse dozens or even hundreds of investing in securities of species . Because of this, it makes the fund risk is significantly reduced.

Online Portfolio
Please use ” hundred minus the current age ” formula when creating a online portfolio. This formula means that if you are aged 60, at least 40% of the funds should be invested in the stock market or stock funds ; If you are aged 30 , to make at least 70% of the funds into the stock market .
Based on the principle of risk diversification , the need to diversify investment funds into different investment projects ; in specific investment projects, but also needs to be done to diversify the asset allocation , so that the proportion of investment right. Remember, the best of any investment portfolio must be spread risk . If you are a novice investor , in the hands of only a few thousand dollars , maybe for a moment, this principle can not be applied ; But with age, your income rises, the hands of the funds distributed to different areas is definitely a wise move. At this time, ” one hundred minus the current age ” formula will be very useful.

Online portfolio of assignment and stock photographer Peter Rohde, including contact information