Building it Better: How we construct portfolios you can count on

In an ever-changing investment landscape, building a resilient and effective portfolio requires more than just picking assets—it demands a clear strategy, rigorous analysis, and a long-term perspective.

This article outlines our approach to portfolio construction: how we define investment goals, assess risk, and select opportunities that align with our clients’ objectives.

We’ll walk you through the key principles that guide our investment decisions, how we differ from traditional approaches, and the key pillars that underpin our strategy—diversification, downside protection, and active management. Whether you're curious about how we select assets or how we respond to market shifts, this article provides an overview of our thinking behind our portfolios.

How we build portfolios

We start by setting clear investment goals, which are directly linked to your broader financial ambitions—whether that’s saving for retirement, funding education, or building long-term wealth. This process begins with determining how much return the portfolio needs to generate on average on an annual basis and identifying the appropriate level of investment risk to take to achieve those goals. Your financial planner plays a key role in this stage, helping you assess your personal circumstances and comfort with investment risk to ensure the strategy aligns with your objectives. We also consider other important factors such as fund costs andliquidity (how quickly investments can be sold), so you have access to your money when needed.

Once we have a good understanding of the overarching portfolio goals, we consider portfolio construction, which is the process of deciding how much to invest into different types of assets, such as stocks, bonds, and real estate. A typical asset allocation approach adopted by many will restrict the types of assets that can be invested in and may impose limits for each type of asset. The challenge with this approach is that assets in the same category do not always perform in a similar way, or in relation to other investments in the portfolio (for example, stocks in the US and China will behave quite differently).In our approach, we aim to build a well-rounded portfolio where all investment opportunities compete for a place in the portfolio. We select the opportunities that show the most promise for long-term growth and are a good complement to the rest of the portfolio.

Next comes the individual manager selection where we thoroughly research a wide range of potential investment opportunities from all over the globe from the best investment minds in the industry. Our global research and manager selection process is driven by the expertise of approximately 100 dedicated researchers at WTW. This global team conducts in-depth due diligence, engaging with fund managers more than ten times on average and investing over 200 hours of research into each opportunity before it is considered for inclusion in your portfolio. Only the most compelling, high-conviction ideas are approved—ensuring a disciplined and selective approach to manager selection.

The table below sets out the extensive research process that takes place behind the scenes before a manager is selected to go into your portfolio.

Diving deeper into each one:

Diversification - We spread investments across different asset classes, industries, and regions to reduce risk. This approach ensures that while one investment may perform poorly, others may perform well, balancing the overall portfolio and limiting overall portfolio loss. Think of it as not putting all your eggs in one basket. By diversifying, we aim to protect the portfolio from significant losses and enhance the potential for stable returns.
Risk protection - Alongside our diversification through multiple managers and investment styles, where it is cost effective to do so we use strategies that tend to provide protection when markets are falling. By incorporating such assets, we aim to cushion the portfolio against market downturns and provide a more stable investment experience.
Active management - Our active managers play a key role in the portfolio by staying closely involved and adjusting investments within their funds as needed. They use detailed research, forward-looking analysis, and professional judgement to identify opportunities in the market. While we don’t often change the managers themselves, we rely on their ability to respond to changing conditions. Their goal is to deliver returns that outperform the broader market, and their ongoing, hands-on approach can offer real value to investors aiming for strong performance.

Monitoring

Once the portfolio has been constructed, we continuously monitor and review our portfolio using various criteria such as risk, return, fees and sustainable investing characteristics (like corporate governance or carbon emissions). This ongoing process ensures that our portfolio remains aligned with our goals and is robust in different economic conditions. Our portfolios are designed to perform well over the entire business cycle – the pattern of growth and decline in an economy over time – which is typically around five years.

We build our portfolios with the expectation that they will meet our defined goals without the need for frequent trading. This approach is important because it helps keep your investments aligned with your long-term goals, even when markets become volatile. By planning for inevitable downturns in advance, we avoid making emotional or reactive decisions—allowing us to stay focused, reduce unnecessary trading costs, and give your portfolio the best chance to grow steadily over time.

Shorter term investment opportunities

While our focus is on long-term investments to drive returns, we also make some calculated short- and medium-term investments to take advantage of expected future growth or attractive current market pricing. By carefully choosing how much money to invest in each idea, we ensure that we don't risk too much money on any single decision. This approach helps us balance potential gains whilst managing risk.Although it depends on the opportunity we’re trying to capture, we would still expect these positions to generate profits over a period of months or even years. Therefore, with our shorter-term investment opportunities we still would not expect frequent trading. Avoiding frequent trading helps reduce costs, keeps the strategy focused, and gives your investments time to grow without being disrupted by short-term market movements.

Our main goal is to build portfolios that can handle uncertain times while staying invested. We aim to avoid making quick, rash decisions and stay strategic. However, we remain watchful and are ready to act if needed. We have employed experienced active managers to look for good opportunities on our behalf at the individual stock level, so while big changes might not be visible, the allocation to stocks and securities within our portfolio is always evolving based on market conditions.

Conclusion
We build client portfolios using the same disciplined and rigorous process used by some of the world’s largest institutional investors—such as pension funds and endowments. We follow a consistent approach of defining investment goals, assessing different risks, and selecting opportunities that align with our clients’ objectives. This institutional approach ensures that your portfolio benefits from the same level of care, insight, and expertise as those managing billions in assets.