Category: Money Tips Date: 2006-10-11
As a very mature on a global scale to invest in technology --- a dumbbell-type investments (BarbellApproach) already is widely used around the world, with the gradual improvement of domestic investment market is expected to gradually become an effective investment tool for fund managers.
The concept of dumbbell-type invest in technology
Dumbbell-ended investment (BarbellApproach) is a very effective portfolio management techniques, that is, select the style, quite different to combine the two types of investment products, the new portfolio of investment products both two certain advantages at the same time be able to avoid a certain some of the losses caused by market fluctuations. This technology first appeared in bond investment. As the portfolio holding only short-term (1-5 years) and long-term (25-30 years) bonds, rather than holding the middle period (6-24 years) bonds, showing a 2 concentration of the distribution, the shape of dumbbells, it is called dumbbell-type combinations, the corresponding investment in technology, also known as the dumbbell-type invest in technology.
Compared with other investment portfolio, dumbbell-style investment portfolio has the advantage of high efficiency, good fluidity and flexibility to adjust the same time sensitive to changes in interest rates. First, the long-term side bonds can offer higher interest income, as a result of lower interest rates may bring capital gains; Second, the short-term end of the bond cash fast, to meet the investors diversification that may arise at any time demand for cash; again, by adjusting the mix the short-term bonds and long-term debt ratio, you can easily adjust portfolio duration and risk structure; Finally, as the combination of long-term side occupy a higher proportion of the bonds, so as interest rates change, the entire portfolio of capital value will appear relatively large adjustment, and thus very sensitive to changes in interest rates.
Investment managers select the style of a great diversity in types of investment products portfolio, the new portfolio of investment products both two certain advantages at the same time be able to avoid losses caused by fluctuations in certain markets. For example, investment managers can build one with a dumbbell-type stocks and bonds portfolio, so that the combination of both growth and stability of the advantages of a substantial rise in the stock market, the portfolio can win a larger profit margins; in underperforming the stock market when the bond market tend to be more positive performance, investors are also available at this time is more stable return on investment. Even in the complete investment in the stock market, dumbbell-style investment in technology is also useful here. For example, investment managers can build one with value stocks and growth stocks of the dumbbell-type combination. Is generally believed that, in the bull market, growth stocks performed better, while in the bear market in value stocks tend to become defensive star. However, in practice, the market wheeled very fast, long-short changes difficult to judge, this time simply to invest in growth stocks or value stocks tend to be caused by operational tempo of step with the market cycle, have suffered losses. The dumbbell-type composition of the above deficiencies can be avoided through reasonable with value stocks and growth stocks ratio, while the strict selection of individual stocks, the investment manager can be done either in a bull market or bear market, have access to a more satisfactory return on investment.
From the global point of view, dumbbell-style investment is already a very mature investment in technology, its application is widely used. Many well-known international asset management companies such as JPMorgan, MerrillLynch, HSBC and so on, have the use of dumbbell-type invest in technology products. Judging from the current domestic situation, the investment operation of fund managers sometimes will take a number of dumbbell-type investment in skills, but clearly about the use of dumbbell-type fund to invest in technology products have yet to see.
Dumbbell-type investment in technology, the concrete implementation
Any investment techniques the need for strict operational plans, operational methods, and operational discipline to do to ensure, dumbbell-type invest in technology is no exception. In particular, in the practical application of dumbbell-type invest in technology, you can proceed from the following aspects.
1, determine the investment portfolio of dumbbell-type focus. There are two dumbbell-type portfolio investment focus, respectively, constitute a combination of two. The use of dumbbell-type investors invest in technology, the first need to do is to determine the combination of two investment focus. Center of gravity in the investment selection process, it is necessary to note that the focus should be two investment properties in the investment has a greater difference. For example, if investors choose to invest in a more aggressive style, the focus of one of the stock as an investment, then the time should choose a more conservative investment style invest in bonds as another center of gravity. For the pure equity investors may choose to value stocks and growth stocks were the two ends of a dumbbell-type combination, the same would be a good option.
2, determine the portfolio composition of the investment center of gravity. In determining the focus of future investment, the investment portfolio in the center of gravity in the right proportion of the overall portfolio risk-reward characteristics have a greater impact. In the dumbbell-type portfolio, does not require the focus of the proportion of two investment were 50%, investors will be free to determine the focus of the investment portfolio, the proportion of risk-return characteristics to gain a portfolio suited to their needs. For example, the dumbbell-type stocks and bonds portfolio, active investment style, who can be appropriately increased the proportion of the stock, while reducing the proportion of bonds; and conservative investment style bias can be properly lowered the stock to increase the proportion of the proportion of bonds . Needs to be stressed that the dumbbell-type of investment portfolio and its focus on the proportion of one determined by the discretion must be strictly according to operate and can not change, or they will lose the original meaning of dumbbell-type investments.
3, selection of investment products. From the actual situation of China's securities market, in the context of asymmetric information, the choice of investment products have been repeatedly proven to be the ultimate portfolio performance has a crucial role. Thus, in determining the investment portfolio of the dumbbell-type center of gravity, the investors need to focus more on the choice of investment products. For example, value stocks and growth stocks of the dumbbell-type portfolio, investment should pick out undervalued as much as possible the most serious, as well as the best growth stocks for the portfolio performance and lay a good foundation.
4, adjusted periodically mix. Investment portfolio in operation for some time later, as time goes by, as well as market fluctuations, the combination of certain investment properties may change. For example, for stocks and bonds portfolio dumbbell, after some time, some bonds may be due at this time need to add new varieties of bonds. Another example of value stocks and growth stocks of the dumbbell-type combination, in a certain period of time, the performance of value stocks may be better than growth stocks, resulting in the value of the portfolio share of stocks than the proportion of pre-determined at this time need to invest in people the proportion of the portfolio of two stocks to re-adjust to meet the original ratio requirement.
