The performance of a portfolio depends:

• For 85 to 90% of asset allocation choices

• For 10 to 15%, the quality of the manager (equity fund, bond portfolio, etc.) or the choice of a particular security.

Asset allocation consists of investing the portfolio across asset classes (equities, bonds, alternative management, money market, commodities, real estate and private equity). Each asset class has its own level of risk. The asset allocation must be matched to the profile of each client and to a given economic and financial environment.

Within the same class, allocation by geographic zone, sector and capitalization is also important: for example, European, American or emerging equities; banking, technology or pharmaceuticals; large, mid or small caps (a compromise between liquidity and growth).

For an asset allocation to be suited to the environment, one needs international expertise in all asset classes, strong convictions, no conflict of interest (i.e. the advisor’s remuneration is not affected by the composition of the portfolio) and no particular bias towards one class or another.

An asset allocation is above all built on a foundation of fundamentals with room to manoeuvre to protect against or take advantage of market emotions. It must be adapted to the anticipated evolution of the environment.

We are not in favor of a commonly accepted asset allocation of 60% equities and 40% bonds. We prefer a fully flexible allocation based on our macroeconomic and strategic analysis.