What asset allocation is
An allocation is not a list of investments added together: it balances availability, growth potential and risk, according to each situation. The available portion covers the unexpected and near-term plans; the portion invested for the long term can withstand sharp swings, unless it has to be sold at the wrong moment.
Each asset class has its role: money market funds and the fonds en euros (euro-denominated fund) of an assurance-vie (French life insurance wrapper) for availability; bonds for regularity and to cushion swings; equities for long-term growth, with falls that are sometimes steep; property and private assets for diversification, with reduced liquidity.
Wrappers, namely assurance-vie, the securities account, the PEA (French equity savings plan) and the PER (French retirement savings plan), determine the tax treatment, the withdrawals allowed and, for some, the treatment on death. The wrapper is chosen with the strategy, not after it.
Diversifying, including over time
Diversification reduces dependence on a single asset, market or region. Regular contributions smooth the entry price. Neither removes the risk of loss.
As a horizon approaches, the share of volatile assets can be reduced. Switches have a cost (fees, sometimes tax) that must be weighed against their benefit.
Costs, over the whole period
Costs (entry, management, switching, fund charges) reduce what you receive. They are set out in the key information documents and the general terms; compare them over your intended holding period.
How the firm works
Everything starts with an inventory: contracts, accounts, funds, opening dates, costs, beneficiary clauses. It often reveals duplication and stacked charges.
Each need (an available reserve, projects with a date, long-term savings) is given a role, a wrapper and a level of risk. Funds are chosen afterwards, on the basis of their key information documents, their costs and their consistency with the whole.
Ongoing monitoring corrects market-driven drift through switches, each proposed with its cost and its rationale.
Who it is for
Savers who want each part of their savings to have a clear role:
- those whose accumulated savings have not been organised;
- those receiving a large sum (inheritance, business sale, bonus) to invest in stages;
- those with many contracts, old ones or ones they know little about;
- those who want to match risk to a project with a fixed date.
What the firm looks at first
- Your horizon and your need for access to funds: what must remain available and what can be tied up.
- Your risk profile: your ability, both financial and personal, to ride out a fall without selling.
- Your wrappers and their costs: what they cost each year, and what a change would cost.
Limits and risks
Unit-linked funds, equities and investment funds provide no protection of capital.
- Loss of capital: the value of investments can fall, including over a long period.
- Past performance is not a reliable indicator of future performance.
- Liquidity: some funds or wrappers restrict withdrawals, or make them costly in tax terms.
- Costs: they add up (contract, fund, mandate) and weigh on the final result.
- Tax: the tax treatment of wrappers can change with the law.
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