Types of Assets

Asset Distribution

Asset distribution plays a key role in risk management for investment portfolios. It helps adapt portfolios to the investor’s goals and limitations, all while respecting the level of risk they are willing to assume. It is estimated that 70% to 90% of a portfolio’s performance is linked to proper asset distribution.

Once you have determined your investor profile, your financial planner or adviser will be able to help you divide your portfolio among the various types and categories of assets.

Asset Categories

Financial assets can be divided into four main categories:

• Cash
• Fixed and variable income securities and bonds
• Growth stocks or shares
• Specialized investments

These asset categories have complementary roles. Their value varies according to a variety of factors. If you have a diversified portfolio, you will benefit from the advantages of each at different times.

Distribution between fixed income securities and stocks makes it possible to balance an investor’s assets according to their profile in order to generate revenue or grow the invested capital.

Roles

The table below contains details on each asset category and its role in a diversified portfolio.

Asset Category	Role in Portfolio
Cash	Covers short term needs and unforeseen expenses in the coming year Helps stabilize portfolio value during prolonged downticks in the market
Fixed and variable income securities and bonds	Provide regular income Minimize the risk of fluctuation in the value of your invested capital
Growth stocks or shares	Help grow capital and generate revenue from dividends
Specialized investments (securities)	Provide additional diversification by investing in instruments that do not fluctuate at the same pace as traditional markets In many cases, provide long term protection against inflation

Avoid Investment Headaches with Turnkey Portfolios

To help investors decide how to distribute their assets, financial institutions have created portfolios based on investor profile types. These turnkey portfolios boast a number of advantages, including:

• Outstanding diversification
• Periodic rebalancing of the weighting of each asset category if market growth or turmoil affects their original distribution
  

When it comes to portfolios, proper balancing is essential, but must be adapted to each stage in your life. We recommend meeting regularly with your adviser to be sure that your portfolio reflects your goals.