Financial Review – Protection Through Diversification

Pete was featured in the Financial Review article titled ‘Protection Through Diversification’ which was written by Alexandra Cain on the 10th of July, 2019. His excerpts are below:

Pete Pennicott, a director of financial advice firm Pekada, agrees most investors use asset allocation to diversify their portfolio. According to their tolerance for risk they allocate a portion of their portfolio into defensive assets that are not subject to capital volatility.

“Other more sophisticated means of providing protection in a portfolio come in the form of structured products and capital protected investment vehicles that provide downside protection. These solutions vary greatly from provider to provider so do your homework and know what sort of protection is going to help you best achieve your goals,” he says.

Pennicott stresses there is no such thing as a free lunch with capital protection.

“The price of certainty of your capital investment will come at the cost of your long-term returns. Each year your returns will reduce and this effect compounds over time. In periods of sustained growth in investment markets you may be giving up 1 per cent to 2 per cent of your potential returns for peace of mind knowing that in the worst-case scenario you will have your capital protected,” he says.

Read the full article here –¬†https://www.afr.com/news/special-reports/protection-through-diversification-20170918-gyjof0

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