Page 130 - Profile's Unit Trusts & Collective Investments - March 2026

Chapter 7 Understanding asset allocation

In short, an “either/or” view of asset classes is seldom applicable. While there are no doubt still
astute investors who shift investments between asset classes according to market conditions
(eg, retreat into cash when equity markets are volatile or declining), the majority rely on long-term
asset allocation for protection. In practice, only a small minority of investors actively switch between
asset classes in response to market cycles; most assume that the investment choices made by fund
managers and advisers will see them through.
This reality makes it imperative for financial advisers to grasp the complex relationships between
asset classes on the one hand, and the risk capacity, risk appetite and investment goals of individual
investors on the other. The solutions are seldom simple. Interest bearing products provide
safety but typically do not produce enough growth in the long term to adequately provide for
retirement needs.
Conversely, the volatility of equities means that too much exposure at the wrong time can seriously
erode retirement capital. To further complicate matters, costs and prudential regulations must be
taken into consideration, especially where retirement products are involved.

128 Profile’s Unit Trusts & Collective Investments March 2026