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Created on 06.02.2019

Asset allocation funds: the right fund to suit every requirement

Investing money is all about finding the mix of investment instruments that best suits you and your requirements. At the same time you need to put together a diversified, broad-based portfolio. Asset allocation funds offer an uncomplicated yet efficient way of balancing these two points.

Every investor has very different goals, needs and a completely different attitude to risk. This is why it is always important to determine your personal investor profile before investing money. It represents the foundation of your investment strategy, and ultimately the basis for investing your money. Your investment profile takes your personal investment horizon, risk capacity and risk appetite into account. You can find out more in the article on investment recommendations.

Diversifying while finding the right mix

Investors can implement their investment strategies in various different ways. But remember: don’t put all your eggs in one basket. To invest money successfully, you need to diversify your assets broadly. The risk should be spread across as many different investments as possible. For example, if you want to buy shares and bonds directly, you’ll need to hold a whole range of securities. This is the only way to really diversify and keep a mix of assets that suit your investment strategy.

Combine different asset categories simply and inexpensively

It’s easier to implement and diversify your investment strategy if you purchase units in different funds. It’s even simpler and less expensive if you invest in an asset allocation fund. Asset allocation funds combine different asset categories in a way that fits your personal investment strategy. Depending on the type of fund, they contain varying allocations of shares and bonds. For example, investors who want to invest more long-term and accept fluctuations in value can opt for a asset allocation fund with a higher allocation of shares. Meanwhile investors who need the money they invested back again in the near future and who want to assume very little risk, will opt for a fund where shares have a lower weighting or none at all.

Invest professionally, even with small amounts of money

Fund managers ensure that the weightings of the different investments in the fund (i.e. the allocations of bonds and shares) remain the same. This ensures that the asset allocation fund reflects your investment strategy at all times, irrespective of how the individual securities in your fund perform. Investing in an asset allocation fund means you can implement your entire strategy with a single investment. The costs are limited as you do not need to purchase a large number of different shares or fund units.

Even with small investment amounts, investors can pursue a broadly diversified investment strategy and benefit from professional investment expertise. What’s more, the diversification within the asset allocation fund means that the risk is spread even with the selection of just one product.

Asset allocation funds for any risk profile

This diagram shows the different types of asset allocation fund you can find. Expected return is shown on the Y axis, and risk is shown on the X axis. Various doughnut charts are spread along the axes. In the risk/return section at the bottom, there is a fund with a 85% bond component and a 15% equity component. This is then followed by a fund with a 70% bond component and a 30% equity component. A greater expected return with a greater risk gives us a fund with a 50% bond component and a 50% equity component. The highest risk and the highest expected return gives us a fund with a 75% equity component and a 25% bond component. And so, asset allocation funds can be used to illustrate the right strategies to suit every requirement.

The ideal basic investment for long-term investing

Asset allocation funds are particularly well suited as a basic investment for investors who want to invest long-term or pursue a core-satellite approach. This involves placing between 80% and 100% of your investment amount in basic investments that correspond exactly to your investment strategy. You can use the remainder of the amount (up to 20%) to set priorities in your portfolio. Depending on your preferences and interests, you could, for example, invest in specialized equity funds which focus on emerging markets, socially responsible companies, real estate or selected Swiss companies. You can find out more about the core-satellite approach in the article “Core investment and priorities for successful investment strategies”.

Set up your portfolio easily

Asset allocation funds are a simple, tried-and-tested way for investors to implement their personal investment strategy and, if needed, supplement it flexibly by setting priorities. Whether you are an investor who wants to assume very little risk or can take more high-risk investments, there are products suited to each investment strategy. Regardless of whether the focus is more risk-oriented or prudent: asset allocation funds are broadly based and uncomplicated. They also give investors who only want to invest small amounts the chance to make well diversified investments. 

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