How great investment portfolios are built - and two ways you can do it

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Helping your current insurance clients with their investments is a win-win. You get to expand your practice by doing even more to help your clients reach their goals. When it comes to building an investment portfolio, you can hand-pick the individual parts yourself or let us do it for you.

Making an investment recommendation is all about knowing your client - things like when they want to retire, how much they have saved today, how much they can contribute in the future, and how much risk they can handle.

Once you know all that, you can build an investment portfolio that is suitable. This usually means coming up with a mix of investments that span various asset classes, geographies, sectors and styles. Here’s a quick primer:

  • Asset classes. At the highest level, this is the mix between equities (or stocks) and fixed income (or bonds). Equities generally entail higher risk but also higher return potential. A young client might be comfortable with 80% equities and 20% fixed income, whereas someone closer to retirement might prefer a more cautious mix of 60% equities and 40% fixed income.
  • Geography and sector. Within each asset class are further divisions by geography and sector. For example, equities can include Canadian and foreign markets and fixed income can span government and corporate bonds. There are also specialty sectors to consider, such as commodities and real estate.
  • Styles. Within each geography and sector, there are investment managers with distinct styles. For example, growth-oriented managers look for companies that are expected to grow faster than their peers, while value-oriented managers search for high-quality companies that are available at a discount.

 

With so many asset classes, geographies, sectors and styles to consider, Beneva takes care of one of the hardest steps for you by analyzing thousands of fund managers around the world and creating a short list of exceptional choices.

If you want to own some of the most undervalued large companies in Canada, we’ve got a fund for that. If you’re looking for corporate bond opportunities across North America, we have you covered. And if you’d like to invest in infrastructure projects from bridges to power and water, we have a fund for that too.

The real question is: do you want to choose from these solutions and build a portfolio yourself, or would you rather have us build and manage it for you?

Method #1: You build the portfolio

A classic starting point for portfolio construction is 60% equities and 40% fixed income. From there, you can adjust the asset allocation depending on the risk tolerance and time horizon of each client.

Broadly speaking, if a client has more time until their goal date or more financial and emotional ability to tolerate risk, a higher allocation to equities may be suitable.

Once you have the asset allocation figured out, you can pick equity and fixed income managers who focus on various subcomponents. The goal here is not to pick the “right” sectors and styles, but rather to choose a diverse array, which will tend to smooth out your clients’ returns over time.

Method #2: We provide a turn-key solution

Many advisors prefer to focus on working with their clients and letting us handle the task of portfolio construction. The best way to do this is to complete the Beneva Profile Selector questionnaire. Based on the results, we can recommend a portfolio that is suitable for your client, and that you can purchase with a single order ticket.

To provide just one example, the popular AGF Balanced Portfolio, available through our investment accounts platform, has an asset allocation of 60% equities and 40% fixed income, and is comprised of multiple best-in-class AGF investment managers with expertise in more than a dozen different geographies, sectors and styles.

As with all of our portfolios, our investment team continually monitors its composition and performance to make sure that investors remain well-positioned for developments in the market and the economy.

 

Building great investment portfolios for your clients starts with defining their goals, time horizon and risk tolerance. Then it’s about assembling the right team of investment managers to help them get where they want to go.

When you invest with Beneva, you can take advantage of our manager research and do the portfolio construction yourself or you can delegate it to our experts. Whichever you choose, you can feel confident that you are doing the right thing for your clients.