Assets other than stocks investors should consider
In the last article, we talked about portfolio allocation recommendations as a guideline for investors. We recommended investing 55 per cent in risky assets (40 per cent in stocks, 10 per cent in gold and 5 per cent in oil) and 45 per cent in debt instruments. The last time, we gave details about the first investment portion - stocks, both local and foreign. In this article, we will talk about investing in other assets.Second portion - Gold (10 per cent): The price of gold in 2013 will be still buoyed by relaxed monetary measures in the US, Europe and Japan. For instance, the US Fed has announced a rise in the spending ceiling of the quantitative easing (QE) 3 and QE4 policies.
The Bank of Japan, meanwhile, has issued its fifth asset-buying measure totalling ?10 trillion (about Bt3.7 trillion). Injecting financial liquidity in the world market will weaken the dollar outlook while hiking gold price to US$1,770 (Bt53,000) to $1,780 an ounce (resistance level) and $1,620-$1,625 an ounce (support level).
Third portion - Oil (5 per cent): According to our assessment, the resistance level of the West Texas Intermediate crude oil lies between $95-$98 a barrel, about the same as the frame of last year, because of the continued pressure on prices exerted by the increasing consumption of natural gas in the US. Since low natural gas prices tend to raise the supply of crude oil, this year we expect only slight rises in oil prices. We also duly note that oil is a fairly stable commodity. In fact, we view investment in crude oil as market trading rather than long-term holding. The support price range should be around $85 a barrel, and the resistance range $95-$100 a barrel.
Fourth portion - debt instruments maturing in more than one year (25 per cent): Projecting Thailand's policy interest rate to still remain low this year, we anticipate the Monetary Policy Committee to lower the rate by 0.25 per cent - from 2.75 per cent to 2.5 per cent. So our advice is to pick debt instruments maturing in one to two years to lock in returns. We also project risks facing long-term investment in debt instruments caused by the issuance of government bonds to continue to spur the economy and reap investment capital for assorted projects of the public sector.
Fifth portion - cash and deposits (20 per cent): This portion is for investment in assets with liquidity comparable to cash, maturing in under a year, like bank deposits, treasury bills, or short-term debt instruments tradable every day. All these will enable you to manage your liquidity and give you a reserve fund for increased investment in risk assets during down periods on the bourse.
A caution for the above-mentioned allocation: You should be prepared to handle medium risks. If you can tolerate higher risks, you should invest more in risk assets, namely stocks and gold.
To suit the investment circumstances of your portfolio, please adjust your investment proportion towards the end of the first quarter of the year, when factors against the stock market, like the solution to the US fiscal cliff, will have become more visible.
Of course, for investors with no time for research, we advise you to invest in mutual funds, which feature investment advisers and planners together with fund managers skilled in investment, who will manage your portfolio to help you achieve your investment goals.
The Fund Management Department of Asset Plus Fund Management contributes this article.