How we construct the portfolio

How we construct the portfolio

Busnelli & Associati avails itself of professionals highly specialized in portfolio management and risk management, in order to provide a personalized financial advice able to satisfy every objective and need.

Portfolio construction is an activity focused on the investor’s profile. There is no such thing as a suitable portfolio for everyone because each investor has unique financial objectives, time perspective and risk appetite.

Our management method aims to maximize the return with minimal risk, with the objective of obtaining a positive result regardless of market trends.

Analysis

Analysis

The following factors are taken into account in the construction of the portfolio and more specifically in the choice of each individual security:

Investor profile:

  • Economic needs (protection of capital from inflation, obtaining additional income through coupons and dividends, capital increase, compensation for previous capital losses)
  • Time horizon (short, medium, long term)
  • Risk appetite (ability to withstand negative fluctuations in assets).

Macroeconomic variables:

  • Central bank policies
  • Level of interest rates
  • Economic growth of States

Fundamentals of issuers:

  • Capital strength
  • Profitability
  • Future outlook

Technical analysis:

by graphically analyzing the price trend of a market or a security, it is possible to identify figures that are constantly repeated; buying when one of these figures occurs allows you to increase the statistical probability of success of that trade.

Asset Allocation

Asset Allocation

The asset classes in which the capital is invested are: government bonds, investment grade corporate bonds, high yield corporate bonds, inflation-linked bonds, bank bonds, European and American equities, value and growth stocks, currencies, commodities (precious metals, industrial metals, energy) and real estate.

Our Asset Allocation, a process in which we select the asset classes and their respective percentages to be included in the portfolio, is determined by both the investor’s socio-economic conditions and market conditions. In other words, our investment strategy aims to balance risk and return by allocating the assets in a portfolio according to the investor’s objectives, risk tolerance and time horizon.

The strategic asset allocation, i.e. the medium-long term strategy, of Busnelli & Associati foresees the following operations:

  • Investments in high-yield bond ETFs, to ensure a certain return and a consistent coupon flow; a real additional income.
  • Investments in the stock market, in order to take advantage of undervalued securities that can multiply their value in the medium-long term and very strong securities in continuous growth.

The tactical asset allocation, i.e. the allocation based on a short-term horizon, of Busnelli & Associati provides for the following operations:

  • Investments in bonds undervalued by the market, which have an excellent chance of returning to their correct value in a short time.
  • An equity part with a short-term horizon, to take advantage of market movements.

Active Management

Active Management

  • The portfolio is not left for months at the mercy of events, there is a continuous process of aligning the portfolio to new market scenarios, increasing or decreasing the weight of riskier assets.
  • Transactions are made to take advantage of the opportunities that the market continually offers.
  • You exit the market promptly when the situation is not favorable.

Instruments used

Instruments used

The instruments used are bonds, stocks, ETFs and ETCs. The latter share the following characteristics:

  • they are the most cost effective
  • they have the best risk/return ratio
  • they are listed on regulated markets and have an official price
  • they can be liquidated at any time without penalty (unlike many banking products)

Risk Management 

Risk Management

Risk management is a fundamental element in the management of a portfolio and is expressed in:

  • adequate diversification, i.e. spreading capital across different asset classes, different issuers, different currencies, to limit portfolio fluctuations and speculative attacks on particular asset classes.
  • daily monitoring of the portfolio and the risks of each instrument
  • timely operation to minimize the size of losses in unfavorable market scenarios
  • use of the stop loss in stock trading

To learn more about the characteristics of our management method, make an appointment without obligation.

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