Perpetual Knowledge Bank Series: Defensive Assets

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Perpetual Asset Management

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Asset classes are often split into two categories - growth assets and defensive assets - with the latter aiming to provide long-term stable returns to investors with lower volatility. Examples of defensive assets are fixed interest investments options, such as debentures and bonds, and cash investment options, which include bank and bank deposits. 

These defensive or income assets tend to provide more stable, albeit lower returns over the long term than growth assets like shares or property. A diversified investment portfolio should combine both, ideally with exposure to multiple asset classes, markets market and regions. A further distinction is that defensive assets generally to provide a steady and/or stable income stream. The trade-off for investors is that these assets generally have lower investment risk, with more stable returns in the short term, but the potential for lower return over the longer term.

The general rule is the longer an investor's timeframe, the higher the level of growth assets you can include in your portfolio. However, if your primary need is for income and you need quick assets you can include in your portfolio. As always, the right type of investment depends on each individual investor's depend on each individual investor's investment objective, time frame and risk tolerance. 

 

 




This information has been prepared by Perpetual Investment Management Limited (PIML) and may contain information contributed by third parties. It is general information and is provided for education purposes only. It is not intended to provide you with financial advice or take into account your objectives, financial situation or needs. You should consider a range of material, and, if you consider necessary, obtain advice from a financial or other adviser, before making investment decisions in relation to your circumstances.

The information is believed to be accurate at the time of compilation and is provided by PIML in good faith. To the extent permitted by law, no liability is accepted for any loss or damage as result of any reliance on this information. PIML does not warrant the accuracy or completeness of any wording in this document which was contributed by a third party.