Continuing the “Journey through uncharted waters” series, we now look at setting targets in the investment portfolio. This continues from last month’s issue where we looked at common types of investment asset classes that form a portfolio. I.e. Cash, Fixed Income, Property, Listed Equity, and Unlisted Equity.
So recapping, the process of investing is a journey. At Nambawan Super having, a robust Investment Strategy assist’s the Fund to chart a clear course.
The process begins with having a written plan. This identifies objectives and constraints to assist NSL to construct the overall investment portfolio. Step 1 is to identify the different asset classes as outlined in last month’s piece, and Step 2, is setting the targets.
Step 2 requires strategically allocating those assets into what is called the Strategic Asset Allocation (SAA). The SAA is a percentage allocation of assets between differing asset classes. This involves considering risk appetites and return goals of the Fund. That is, distributing funds into the classes that meet the goal or objectives.
NSL’s overall SAA targets are 75% Domestic, and 25% International, which is then broken up into the respective asset classes with target percentages of portfolio. The SAA is driven by the Fund’s Board of Directors.
Source: NSL Investment Strategy
The SAA is the compass that points us to the end of the journey.
As the journey progresses, conditions may change requiring short-term movements within the SAA. This ability to move assets within asset classes is called Dynamic Asset Allocation (DAA). The DAA is driven by the Fund’s Management.
After setting allocation and targets, the next part of the process is selecting which investments to buy or sell and overall investment monitoring. This will be covered in next months publication.
Nambawan Super understands that investing is a journey and takes time, having an Investment Strategy that has certain features, covers certain assets and allocated appropriately, the Fund will continue to grow member’s funds for a journey after retirement.
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