Geographic diversification will be important to portfolios going forward, according to Charles Smyth-Osborne, head of private clients at GAM.

Speaking at the Charity Investment Forum on new angles on diversification after 2008, Smyth-Osborne said the financial crisis showed diversification was not as thorough as had been hoped.

“In 2008 we saw that you could have a portfolio of differing investments, but many were driven by the same drivers. When the crisis broke it was realised diversification was not what was hoped.”

To achieve greater diversification, geography would be important going forward, advised Smyth-Osborne.

He pointed to the huge financial performance of emerging markets in 2009 and the performance of developed markets this year.

“Pick up themes in world markets,” he advised. “Don’t just follow indices.”

He also said the hedge fund world had a strong record and was still worthy of a place in portfolios.

“To address hedge fund doubts USIT III funds are regulated, liquid and are transparent with regular updates and valuations.”

He added the combination of fixed income and equities had been successful for many years. But while, fixed interest was still important, as prices had fallen sharply, it put pressure on the rest of a portfolio to perform.

For equities, the long term outlook was still very good, and it remained the main growth of most portfolios, he said.

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Future focus on emerging markets important, says GAM

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