Past performance is not a guide to future performance but it can show you how unpredictable performance can be. The table below shows how different asset classes have performed over a succession of calendar years and that no one single asset class consistently comes out on top.

Sources (Thomson Datastream):

• World Equity: FTSE World excluding UK (dividends reinvested)
• UK Equity: FTSE All Share (dividends reinvested)
• UK Property: UK IPD Index
• Bonds: FTSE Government All Stocks (income reinvested)
• Cash: UK base rate – this is the interest rate to which banks usually link their deposit rates. Actual rates offered
  will tend to be lower than this
  

The table also demonstrates how difficult it is to forecast which asset class will outperform in the future. Past performance shows us that different asset classes do not necessarily react in the same way to any particular set of market conditions. History and experience has demonstrated that no-one can predict when each of these asset classes will have their ‘purple patch’ or their slower period. However what normally follows is that if returns have reduced in one asset class, then normally this is compensated by improving returns in the other asset classes.

We believe that a portfolio with exposure to many asset classes has the potential to deliver more consistent and less volatile returns than a portfolio invested in just one asset class. The optimum split between these asset classes depends on personal objectives for the portfolio and the level of risk that a client wishes to take. A more adventurous investor may have a higher weighting in equities whilst a more cautious investor will have a higher weighting in cash and fixed interest. Our role is to ensure a portfolio is constructed to match the risk perspective of the individual client and is tailored to suit their personal investment goals.

Here is a slideshow of a series of illustrative Pie Charts showing varying asset breakdowns based on lower to higher attitude to risk.

The next table shows portfolio returns since 2003 for some risk profiles.

The above notes on Investments are intended to provide a general appreciation of the topic and it is not advice. Guidance should be sought from a specialist like ourselves who is qualified to advise in your specific circumstances.