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Jason Pride, Glenmede director of Investment Strategy, on how investors can have a balanced portfolio in 2012.
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-- -- Now our first guest says avoid extremes and look for the sweet spot by playing the metal joining us now to explain -- Jason pride director of investment strategy for it.
-- -- Actually is that you know played a -- what does that mean.
But thanks -- me on Charles you know really what it is.
Is investors have a number of options -- traditional approach is to go all the way to one extra murder had two extremes in your portfolio.
To -- could put.
Full tilt equities in your portfolio and then on the other side have a balance a very conservative bonds bonds are safe haven equities where you take your risk.
And that's the way a lot of people think -- from our perspective.
Equities may provide a little bit too much risk for the return you're getting in a slow growth environment over the next say three to five years.
And -- on the other hand at 2% are arguably providing you to overturn.
Despite the fact that they are giving you a lot of protection.
There -- a lot of asset classes and investments he can make in the middle you can drift inside on equities towards quality equities more stable companies.
In fixed income you can choose to take more risk by shifting more towards high yield.
Our government bonds other than the united states of me in the developed nations.
As well as other avenues in order try to pick up your return.
Potential in a slower growth higher volatility environment that we think is going to persist for -- -- This makes a lot of sense given all those conditions that we know we -- gonna have to deal with going into the rest of the year Jason.
Why pick sides when you can have a little bit of -- steady Eddie equities that's what your liking.
In going into the area tell me exactly what that is.
Look you know when you buy equities there's a -- Whole range of things out there there are things that are.
Completely low risk like utilities.
All the way up to very risky things like you know some -- more innovative or newer technology companies industrials are very levered.
There's a lot of things in between.
There are number of companies with extremely large profit margins the just generate.
Excess returns on cash or an on -- just because of their position with their industry they don't need that much economic growth to generate good returns.
That's what we're looking -- those sweet spots of stable solid earnings growth within our equity propose aren't really looking for in this and.
-- -- again recent examples -- -- some of the names have fall into that category for you.
They're two of the best examples we've been tossing around for people are Colgate-Palmolive.
And Philip Morris international.
You get a number different flavors -- first fall you know cigarettes and tooth and tooth -- very stable sort of demands for those those items as -- household cleaning.
Then you add on to -- the margins in those companies command profit wise.
And the fact that they have a fairly diverse international base that actually has a pretty large concentration.
Towards the emerging market consumer where you see consumers getting ten to 20% pay increase is right now.
Jason.
And I -- you guys are professional money managers a lot of people watching this show.
Haven't sort of sold that studying you know -- stay in the middle sort of approach.
And they find themselves looking -- 41 K statements or retirement statements that haven't budged much the -- hasn't budged much over the last decade.
Is that there's going to be a point somewhere where our market really starts to take off.
-- -- be worth the risk Begin to more high beta names may be just ahead yourself there's a little bit.
To participate in what look bills like a rally that's long overdue.
But killed were we advocated very balanced approach across the portfolio this doesn't when -- promoting the idea of steady -- in the middle and moving towards -- metal base could -- -- better dad doesn't mean.
Avoid everything across the extreme.
You do want to have a bit of your portfolio out on the edges to protect you on the fixed income side to give you that upside potential -- in the more growth environment.
But -- -- environment of three to five are appropriate five years they don't -- -- to to present GDP growth.
Those -- fighters in the middle it doesn't feel like you're getting a huge.
Return but it's gonna be better than what's going to be occurring at the two extremes.
In terms of volatility or return.
Eventually.
We've been going through a sideways market for perhaps about ten years run a little bit over right back -- perhaps stay around for a little while.
But at some point in time one of these days I think it's still a little bit off.
We'll get back to a more dramatic upward shifting market it's just not that time yet in the meantime before that happens how often do you guys to go and then sort of rebalance your portfolio.
But we rebalance well becomes know whenever the opportunity comes along -- -- rebalancing portfolios.
Recently added -- we have been shifting a little bit more risk into our portfolios.
And yeah this is our thought process that what you can't just take three to five -- -- -- best in stay there -- sometimes you get shifts around the edge.
-- right now what we're seeing is the economy on the margin.
Is improving in the right direction and therefore taking a marginal amount of additional risk not too much so because we -- -- maintain that middle of the road.
You know moved to the middle sort positioning portfolio and we think is the sweet spot.
For the long term while the sweet spot sound like it's we strategy.
Thank -- Charles.
