Portfolio Management Developing an Investment Strategy

The first step in developing your investment strategy is determining the appropriate reference or base currency. This is the currency in which your portfolio's performance is measured.

Usually, the base currency would be the currency of the country in which you reside in or manage a business in. Typically, in a globally diversified investment portfolio, this currency would obtain a significant weighting and will influence the weight of the additional diversification currencies in the portfolio.

The next step in determining an appropriate strategy involves a clear definition of your investment goals. Above all, your expectations regarding the returns on your investment and the risks you are willing to bear, must be clarified. In general, higher returns can only be obtained by taking on more risk, in terms of the fluctuation of your portfolio's value. Next to the choice of base or home currency, your risk profile constitutes the principle determinant of the structure of your portfolio. If the portfolio in question only represents a portion of your overall investments, however, we could develop a strategy with a specific geographic or asset class orientation.