Tag: Beta

Managing Portfolio Volatility

Posted by WFG – June 23, 2011

While stocks and volatile investments are often profitable in the long run, many can be short term nightmares. If you’re investment plans include short terms goals then you’ll want to manage your portfolio management to lower volatile investments.

  • Start by making a list of all your investments. This includes stocks, mutual funds and bonds. Note down the category that they each fall under.
  • Find out the beta coefficient of mutual funds in your investment portfolio. This can be done by looking through financial publications such as the Wall Street Journal. If the beta is high then the investment will be more volatile.
  • Split your investment portfolio into funds that you can keep long term, and short term. The short term money should be put into risk free investments.
  • Take a look at the mutual funds you own to see if they’re diversified. An investment portfolio with good diversification will contain different caps. You can create diversification by purchasing the total stock market index funds.
  • Invest some of your funds outside of your home country. This will add diversification to your investment portfolio. It does this because foreign investments aren’t affected in the same way as home country currency.
  • You should perform portfolio risk analysis every few months to keep on track with your market. Markets fluctuate and it’s better to stay on top of the changes.

For more information on your investment portfolio contact the Winflow Financial Group.

The Aggressive Portfolio

Posted by WFG – June 22, 2011

Investors are always reminded that diversification is the key to success. But with new theories being expressed this might be a thing of the past. Some believe that portfolio management means sticking to a certain style and one that you know well. But with a few different styles how do you know which one is best for you? In this mini-series we’ll be discussing the different styles and start with the aggressive portfolio.

The aggressive portfolio, or what some people call the basket of stocks, includes the stocks with high risks and potential high rewards. The stocks will own a high beta and sensitivity to the market. Beta sticks that rate highly experience the larger fluctuations that are relative to the overall market. If the stock you own has a beta of 2.0, it will usually move twice as much as the current market.

Most of the aggressive stocks are in an early stage of growth, and hold value proposition that is unique. When building a portfolio of these companies you will need an investor that is willing to explore the market more than normal, as these companies will be unknown to a wide range of people. They can do this by looking online and checking earnings growth. The common sectors to look into are technology though completing research will help before investing.