Building a shipshape portfolio for the rough year ahead

1 We suggest that you allocate 30 per cent of your investment to high-liquidity assets with an investment horizon of less than one year. We would recommend cash deposits, treasury bills, or short-term debt instruments with daily trading liquidity, in order to await other investment opportunities in the next period. We also recommend allotting some money for a six-month emergency reserve, such as for flood relief or health funds.

2 We would encourage you to invest 25 per cent of your portfolio’s worth in long-term debt instruments. You may put 15 per cent in local debt instruments, such as bills of exchange and good quality corporate bonds. The period for investment should not be longer than two years, to avoid the volatile return on long-term debt instruments in the wake of the government-funded “New Thailand” project for rehabilitation after the flood. The project is expected to cost up to Bt1 trillion, with capital raised from the public via government bonds.

Another 10 per cent should go into foreign debt instruments. We suggest Asian bonds – Chinese, South Korean and Taiwanese – due to their potential for growth and high credit level. You should avoid Euro bonds, due to the public debt crisis. For the US, we suggest you invest in individual securities by studying each company profile and financial statement carefully.

3 We advise you to move around 30 per cent of your total investment into equity. This can be split, with 20 per cent going to local equity, especially in the retail, commercial banking, food and beverage, and construction materials sectors, which tend to grow well from domestic consumption. The other 10 per cent can go to foreign equity, especially Asian stocks (try China and Hong Kong). In addition, investing in multinational companies, whose revenue derives from businesses around the world, can enhance your portfolio returns.

4 We suggest you put about 10 per cent of your investment in gold, the price of which is supported by the US government’s “Operation Twist”, which expires in June and may be replaced by another round of quantitative easing (QE3) in a bid to continue economic stimulation. Moreover, the public debt crisis in Europe is ongoing,  with no concrete solutions in sight. Also, the demand for gold from central banks has increased. All these factors will support a rise in the gold price this year.

Finally, oil should take up about 5 per cent of your portfolio, as China is pushing the oil price up through demand from the automotive and petrochemical industries. Volatility and the slowdown of the global economy are also major factors supporting the oil price.

The suggestions mentioned above are just a guideline for your investment allocation. You must, however, be aware of your own investment goals and risk appetite, and study information on each financial instrument carefully. Alternatively, you may choose to invest in mutual funds. 

An investment adviser and fund manager can help you achieve your goals as an investor. But remember that investment contains risk, so please study the relevant information and prospectuses before deciding to invest.

 

Jarulag Ruangsuwan is senior vice president of the Sales & Marketing Department, Asset Plus Fund Management.