Occasional Visitor
Posts: 1
Registered: ‎31-08-2016

Investment Strategy

Question: I have been increasing the use of Dynamic Asset Allocation funds in portfolios. My concern is that, due to fund manager discretion, there will be times when th asset alocation is outside the typical traditional strategic investment ranges. I suppose I could cater for it in the ranges by widening them, but I am concerned that this sort of wide range ceases to become a useful tool to review and manage portfolios, and may expose me to the risk of being sued in adverse conditions.

Anyone have suggestions about the best way to detail this in the formal investment strategy each review?

New Contributor
Posts: 4
Registered: ‎23-09-2015

Re: Investment Strategy

That's an interesting question. I suppose the "easy" answer would be to simply categorise Dynamic Asset Allocation funds as "Alternative Investments" - that way you wouldn't need to worry about the underlying exposures within the fund, only the amount invested in the fund as a whole. It's kind of cheating a bit, but many DAA funds have a real return objective so you could make a good case for classifying them as Alternatives. The big downside to this approach though is that, if you wanted to invest a substantial portion of the portfolio in DAA funds, then you might find it difficult to justify why the portfolio has such a large exposure to "Alternatives", so you're kind of back to the same problem!

Download our ebook
"Taking your SMSF to the next level"