Your investment options are made up of different combinations of assets classes, each has its own characteristics and play a particular role within an overall portfolio
Growth Assets – designed for overall capital growth. Investments such as shares, alternatives, and property form the part of growth within a portfolio. Generally, these types of assets will provide you with returns in the form of capital growth (rather than income). A majority of the return a capital appreciation (rise in the value = growth in asset value) of an investment over the long term.
The increase/decrease in the value is known as capital growth or loss, returns are strongly influenced by the market fluctuations, vary more so over short term periods. These frequent fluctuations (volatility) are why these assets are considered a higher risk investment.
Defensive Assets – provide returns in the form of income. Investments such as cash or fixed interest tend to carry lower levels of return over the long term
Therefore as an investor, your risk profile (tolerance and aversion) comes into play to ensure that your portfolio aligns and has a balance of the best growth/defensive assets (diversification) to suit what you are comfortable with and still meet your goals and objectives.
Asset Classes
