• Wed
  • Aug 20, 2014
  • Updated: 5:36pm

First, check the risk factor

PUBLISHED : Sunday, 14 December, 1997, 12:00am
UPDATED : Sunday, 14 December, 1997, 12:00am

TO set up a successful investment portfolio, a customer must first know how big a gamble he is willing to take, according to Bruno Lee Kam-wing of Fidelity Investments.


Once the risk position has been decided on, a package can be created to fit the requirements.


Mr Lee, Fidelity's director of direct retail business, said in general there were two different portfolios which could be suggested to a person wishing to invest their bonus - one for the aggressive investor and another for the more conservative type who took a long-term view.


'Obviously, we will check if the potential investor has put some money aside for tax purposes and for expenditure over the next three to six months,' he said. 'Once that has been established, we will check if the customer is a long-term investor willing to put money aside for three to five years.' Investment opportunities would be chosen depending on the amount of risk considered acceptable by the investor.


A more aggressive investor would be 'looking for a higher return and would have a strong stomach for the ups and downs of the stock market', Mr Lee said.


This would involve putting 40 per cent of funds in a globally diversified fund such as the Fidelity International Fund which invested in equity markets around the world.


Since its launch on December 31, 1991, the fund had registered a 13.2 per cent annualised growth rate.


About 15 per cent would go into the Fidelity European Growth Fund, which had achieved a 13.3 per cent annualised growth rate since its launch on October 1, 1990.


The opportunity for big returns would be maximised by putting 5 per cent in the Fidelity European Smaller Companies Fund. This had achieved 30.8 per cent annualised growth since it was launched on December 1, 1995.


Another 20 per cent would be placed in the Fidelity South-East Asia Fund. Since its launch on October 1, 1990, the fund had recorded a 10.3 per cent annualised growth rate and Mr Lee predicted it would continue to be a strong performer despite the regional financial crisis.


The rest of the investment would be put in the Fidelity International Bond Fund, which had achieved an annual return of 7.1 per cent since its launch on January 10, 1990.


For the conservative investor, bonds would make up a far larger percentage of their portfolio.


About 40 per cent would be in the Fidelity International Bond Fund and the remainder in stocks.


Forty per cent of the total investment would be placed in the Fidelity International Fund, 10 per cent in the Fidelity European Growth Fund and 10 per cent in the Fidelity South-East Asia Fund.


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