Are your clients actually diversified? The hidden risks inside every portfolio

How should advisors make sure they're not doubling up then? Is there a portfolio audit that you think every advisor should run where they can make sure or some sort of easy checks to make sure that they're not overexposed? I feel like across so many funds, it would be hard to know exactly what you're investing in, particularly in private markets where there's not as much transparency.

Yeah, transparency or clarity.

Look, I think... focus on the biggest blocks of your portfolio.

So in my mind at the moment where an advisor can add a lot of value very quickly is taking a look at the global equities or the international equities part of the portfolio And just doing a name and a sector check, what's really interesting at the moment, emerging markets used to offer sort of diversification to develop markets, different economies, different types of businesses.

But if you look at the really big names in emerging markets, something like a TSMC, you'll start to see that creeping into developed market portfolios as well.

At the end of the day, it's all producing chips.

Is it really offering you the same level of diversification that it used to? If the music stopped in this thematic, what would be the residual value of these assets as a way to build in portfolio resilience?

So if you're building a multi-asset portfolio today from scratch, what would your economic map include? What asset classes would you be focusing on and which ones would you be avoiding?

It's a really interesting idea if you're building sort of a multi-asset investment process from scratch today.

In a way, I actually think asset is the wrong way to be approaching portfolio construction.

At different points in time, different rules of thumb are really helpful in understanding risk.

But given the pervasiveness of the sort of the mega trends that we're seeing at the moment Looking to use asset class to understand how much risk you're carrying has become less effective.

And the one that I think that is most important at the moment is understanding particularly the sector exposure in your portfolio.

It really helps you understand the concentration risk.

This ebbs and flows, but for an Australian investor, this is quite an important focus.

Even standing away from the megatrend of AI and looking at what's happening in private credit, if you think about your total Australian exposure, On your equity side, you've got 30% of your portfolio if you're in the index in banks.

On your credit side, some of the biggest borrowers are the banks.

And then on your private credit side, you can often be exposed to real estate and lending in the same sectors.

So with that part of the portfolio, potentially the private credit side, under pressure at the moment, it's like, what can advisors do about that? The funds are in a moment of stress.

I think right at the moment, what they can do is look through their portfolio and see what other parts might actually be exposed to the same fund.

trends and work out whether the amount of total risk that they've got exposed to that sector is right.

Does that mean diversifying away from banks and Australian equities because it's overlapping? Does that mean focusing more on government bonds rather than credit because it's a different exposure? Is that more important at the moment? And that's what I'd be looking to do if my portfolio is exposed to some of these areas.