Portfolio Solutions

Risk. It comes in many forms. As the investment landscape shifts, investors are hard-pressed to meet their goals without taking on additional risks, making the value an advisor can provide through portfolio construction more important than ever. We can help – through our work with thousands of advisors each year, we develop insights and expose the risks troubling portfolios today.

New Risks. New Insights.

Ensuring you follow a defined investment process is crucial to producing and explaining results in line with established goals. We’ve identified new insights around each step in the process to help advisors provide even greater value to the investors they serve.

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Portfolio Construction Process

Four steps to portfolio construction

 

Number 1

Benchmark

Benchmarks act as a foundation for the portfolio, help measure results, and guide decision-making throughout the life of the portfolio.

What we see: Benchmarks are troublingly underutilized.
72% of advisors used benchmarks in reviewing performance with clients while only 56% used them in building portfolios.*

 

Number 2

Budget

Having discrete risk and fee budgets help advisors make and articulate tradeoffs in investment decisions that align to client objectives.

What we see: Risk budgets are misaligned with actual results.
Only 35% of portfolios that were seeking a return similar to their benchmark, but with lower risk, successfully achieved that goal.*

 

Number 3

Invest

Performing rigorous due diligence on every investment you consider can help ensure that you fully understand how it may affect your portfolio’s total risk / return profile.

What we see: Correlations make it harder to lower risk.
58% of advisors used alternative investments to reduce portfolio risk, but missed the rising correlations to equity markets.*

 

Number 4

Monitor

By monitoring portfolios with discipline, you can more easily identify new risks and quickly find remedies.

What we see: Maintaining a risk-balanced portfolio is complicated.
70% of aggressive, 80% of moderate and 90% of conservative portfolios held more risk than their benchmarks.*

How do you see portfolio risk?

Everyone sees risk differently. To some, it’s volatility of returns. To others, it’s simply losing money – either through market downturns or declining purchasing power. At BlackRock, we look through a series of lenses to help create a clearer picture of a portfolio's risk.

Assess your portfolio

Know what you own, today

Investors often look backwards to assess risk, asking: what happened over the last one, three or five years? But a portfolio’s past behavior may not represent the current risk embedded in its holdings.

Look beyond the past

How do you see risk?

Zoom in on specific risks

The naked eye can only see so much. Our proprietary risk platform – Aladdin® – maps exposure to over 2,200 distinct risk factors, the underlying drivers of a portfolio's behavior.

Examine risk more closely

Market shocks

Prepare for market shocks

Do you know how your portfolio might react to a market downturn or an interest rate spike? Calibrate your expectations to help you better prepare for what may happen next.

Shock a portfolio

  

Contact your BlackRock Investment Management Consultant to learn more or
call 877-ASK-1BLK (877-275-1255).