There are a number of different asset classes and sectors in which you can invest, each with their own levels of risk and reward. At Equilibrium, we will help you decide which asset classes are best suited for you and the best options to help you meet your financial objectives. We will weigh up the different classes and advise you of those most likely to provide the returns you are after.
Speak to our experts today to find out how we can help with any aspect of your investments. We have offices in Wilmslow and Chester and can help people across the North West. Either call us on 0808 156 1176 or complete our online enquiry form and a member of the team will give you a call back to discuss your situation in more detail.
Types of Asset Classes - Returns and Risks
We invest in various asset classes and deal with a range of investment portfolios. These include the following (from the least risk and return to the most) and outline the potential risk and reward involved:
This carries the least risk and the least returns and involves cash being held in a bank account while attracting a rate of interest.
Cash investment brings liquidity to a portfolio and allows us to act quickly, such as in the event of market volatility.
Cash investment returns are from interest payments only, with no capital growth potential. Inflation could erode the value of your money.
For more information about cash investment, see our Quick Guide to Cash Investment.
Fixed interest investments carry greater risk and should bring greater returns than cash investment and involves funds being invested in debt instruments, such as government gilts and corporate bonds. The underlying securities have a fixed rate of interest payable for a fixed term, but the capital value can go up or down.
Fixed interest returns are from interest payments combined with the potential for capital growth.
Fixed interest is usually regarded as lower risk than equities, but can be affected by changes in interest rates or inflation. It is not always easy or quick to trade in the underlying securities as there is no formal exchange.
For more information about fixed interest, see our Quick Guide to Fixed Interest.
Investing in commercial property carries greater risk and can potentially bring greater returns than fixed interest investments, with returns derived from rental income or capital growth in the underlying properties.
Property investment involves funds that primarily invest directly in a number of 'bricks and mortar' commercial properties. Our selected funds have no more than 20% in property shares.
It can take a long time to buy or sell a building, and so this asset class can be relatively illiquid, particularly during periods of uncertainty where higher than usual outflows could result in redemptions being suspended.
For more information about property investment, see our Quick Guide to Property Investment.
Alternative equity carries greater risk with the aim of providing greater returns than property investment and involves funds that utilise non-traditional investment styles, including long/short funds, hedge funds, structured products, private equity, currencies, commodities and other alternative investment classes.
Returns from alternative equity are likely to be all capital-growth related. Although income can sometimes be generated, this is generally very low.
It is expected that this asset class will have some equity correlation, but will typically have lower volatility than traditional equity.
At Equilibrium, we also invest in defined returns. These products return a defined rate given an underlying index is above a specific level on the anniversary of the product - known as the 'kick out' date. If the product does not 'kick out' on the first anniversary it rolls over to the next, and so on, for a maximum of six years. To find out more about these products, click here to read an article written by one of our investment analysts explaining defined returns.
Equity investment carries the most risk but can bring the greatest returns over the longer term, and involves funds that hold shares in companies listed on a recognised stock exchange.
The returns from equities investment are from capital growth and company dividends.
Equities investment is usually viewed as a long-term investment with high potential returns, but with potential for significant losses.
For more information about equities investment, see our Quick Guide to Equity.
Contact Us Today
Contact the team at Equilibrium today for more information about asset classes and sectors and to get a clearer idea of which options are best for you. We have supported many clients from in and around the Manchester and Cheshire areas. Call our team today on 0808 156 1176 or complete our online contact form and we will call you back at a time convenient for you.
The information contained within the website should not be looked upon as advice or recommendation. Clients should seek the appropriate guidance from their financial planner.