What is a Portfolio?

A portfolio is made up of various asset classes, individual securities, investment geographies, and sectors.

Diversification is key to portfolio management—holding a variety of assets reduces overall risk and the possibility that a single security or asset class will drag down performance.

The right mix of assets—for example, equities, bonds, alternatives, and cash—can help to maximise the risk-reward from your investments.

At DBS, we utilise the Asset Allocation Framework, set out by the Chief Investment Office (CIO), to determine the relative attractiveness of various asset classes that you could include in your portfolio at any given time.

What is the CIO Asset Allocation Framework?

The CIO Asset Allocation Framework summarises the team’s outlook for various asset classes across different geographies, and is updated quarterly.

The team assesses various asset classes’ relative attractiveness, based on three categories: Fundamentals, Valuations, and Momentum.

• “Fundamentals” encompass top-down economic drivers such as growth, inflation, monetary policy, and bottom-up drivers such as earnings growth and surprises.
• “Valuations” indicators for equities include forward price-to-earnings ratio, price-to-book versus return on equity, and earnings yield versus 10-year bond yield. For corporate and emerging market bonds, we track credit spreads (the difference in yield between two bonds of similar maturity but different credit quality).
• “Momentum” indicators are fund flows, market volatility, and catalysts, which cover other factors that may impact the outlook on various asset classes.

Read our latest Asset Allocation report