Investopoly Ep 380: An evidence-based approach to constructing an investment portfolio
In this episode, Stuart unpacks what it really means to construct an evidence-based investment portfolio and why portfolio construction is arguably the most important decision an investor can make. He explains how diversification across shares and property helps smooth returns, not because it eliminates volatility, but because it helps investors stay the course and adapt to life’s inevitable curveballs.
Stuart takes a deep dive into factor-based investing, highlighting the importance of selecting investment strategies grounded in fundamentals like Value and Quality, while being wary of overhyped strategies such as Momentum, which often falter when trading costs and taxes are factored in. He discusses how to build an "all-weather" share portfolio, the importance of starting valuations, and the role listed property and infrastructure can play in balancing growth and defensiveness.
He also explores the role of liquidity, why he remains cautious about unlisted investments, and how residential property, with its low correlation to shares, can enhance diversification. Finally, Stuart outlines his preferred approach to asset allocation, blending direct property and diversified shares using rules-based strategies, all while staying agnostic to asset class labels and focusing purely on what best serves long-term financial goals. A must-listen for serious investors looking to sharpen their portfolio strategy.
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