The first lesson we are all taught is not to keep all your eggs in one basket, yet it is striking how concentrated most investors’ portfolios are. Some investors hold in excess of 80% in equities alone. The effects of this concentration are clearly visible when looking at the UK’s index of largest capitalised shares, the FTSE 100. Having peaked at 6930 in December 1999, investors are still currently under this high water mark, 11 years on. The FTSE 100 Index currently stands at 5312 (28th November 2011), 23% below it’s high water mark in December 1999.
Diversifying between uncorrelated asset classes aids in reducing overall portfolio volatility while benefiting from the effect of compounding over the long term. We outline below a simple graph comparing Yale University’s fund, a prime example of a diversified portfolio, in comparison to a typical UK Balanced portfolio and how both have performed over the last 10 years.
Millen Capital’s Offering
In addition to our monitoring of investments and structuring of transparent, simple and cost effective SIPPs, Millen Capital has teamed up with an experienced firm whose expertise lies in evaluating and analysing the hedge fund industry, as well as monitoring individual hedge funds. Consequently Millen Capital is able to offer investors access to a range of funds and products in the hedge fund space, including funds of hedge funds, multi-strategy funds and single managers.
Source: www.yale.edu/investments
