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Balanced portfolios

Maj Invest manages balanced portfolios both as funds in the mutual fund Investeringsforeningen Maj Invest and as segregated accounts. The management of balanced portfolios includes both an asset allocation decision establishing the weight of each asset class to be included and the selection of underlying investments in the different asset classes. The investment return therefore depends on both the asset allocation and the selection of securities.

The process for asset allocation is based on a combination of analysis and risk management.

The aim of the analysis is to identify and understand the important global economic themes at an early stage, and to evaluate the impact on financial market returns. As a long-term investor it is one of our greatest skills to look through short-term and unpredictable changes and instead focus on themes causing structural changes and impacting the long-term underlying fundamentals. Sometimes it is possible for long-term investors to make attractive contrarian investments arising from short-term and unpredictable movements in the market, which might be perceived as irrational.

Quantitative models are used as an integrated part of the analysis with emphasis on the following:

  • To determine the underlying fair value of the different financial assets
  • To evaluate the potential impact of the identified global economic themes on fair value
  • To describe and understand differences in fair value and the current pricing of financial assets

The conclusion of the analysis includes an assessment of the risk/return profile of the different asset classes.