Building Resilient Portfolios: how asset allocation can drive portfolio performance

9 July 2026

One of the most frequent conversations I have with clients is about asset allocation within an investment portfolio. It is widely understood that different types of assets carry different characteristics that can impact the return profile. This can add the benefit of diversification within a portfolio and potentially impact returns throughout various market conditions.

There are certain assets which carry more risk, which in theory should generate more returns, such as equities. Then, there are also lower-risk investments which carry more capital security and therefore have a lower expected level of return, such as fixed interest. In our portfolios at Walker Crips, we look closely at the following asset classes:

1. Equities

2. Fixed Income

3. Alternatives

4. Real Estate

5. Cash

It is our belief that portfolios benefit from blending the above asset classes to try and best generate returns alongside protecting the downside during negative market periods.

Equities

The equity asset class is one of the highest-risk asset classes within portfolios and is largely a core component of what we invest in. This is where the bulk of returns can come from over a long-term period. Equities do also pose downside risks where your investment can return less than your initial outlay depending on performance. Equities have the potential to deliver strong returns, but their performance can vary dramatically.

An equity is a portion of a business or asset that one owns. For example, if we look at Nvidia, a large company that one could own a portion of therefore making it fall into the equity class, their share price has delivered a return of approximately 870% over a 5-year period. Whereas if we look at Diageo, the shares have declined by approximately 56% over the same period.

Therefore, it is important to have a diversified approach to equity holdings, including various sectors and geographies.

There are numerous ways to potentially identify attractive equity investments. This can include fundamental analysis (looking at valuations and business financials), alongside technical analysis (which looks at chart patterns). Using these analysis techniques can potentially enhance long-term returns and identify attractive investment opportunities.

Fixed Income

Fixed income assets, or bonds, are generally lower risk than equities, but they can still carry the risk of loss of capital. Bonds are essentially debt issued by a company or government to obtain capital that they can put to the use they require. In return, they pay investors either a coupon (interest payment) or income yield (meaning the return an investor earns from the bond usually expressed as a percentage).

So, for example, the UK government issued a government gilt paying a coupon of 4.375% which matures on the 7th of March 2028. This investment would be considered to carry very little risk as the debt issuer is the UK government, which is perceived to have a good credit rating compared to smaller, lesser-known companies or those in higher-risk actual locations around the world. 

What this means is that the UK government will pay 4.375% for each government bond that has been issued and it will be redeemed at the par value (amount paid) on the maturity date. As a result, if investors bought the bond at a par value of £100, they would receive £100 at the maturity date, meaning the return has been generated from the coupon payments during the holding period.

The price can fluctuate daily based on market expectations - heavily influenced by inflation and interest rates - meaning capital loss can take place if sold before maturity. However, the lower the duration (time until maturity), typically the lower the price risk.

Alternatives

This category can include a wide variety of investments and is often the area of a portfolio that provides a different correlation to other asset classes. Here is a flavour of the types of assets we might hold in this area:

• Gold: Historically, gold has performed well during times of challenging market conditions. Investors quite commonly hold gold exposure as a hedge within the portfolio to provide potential upside during market downturns.

• Structured Products: We are a leading retail provider of structured products at Walker Crips. These products deliver a defined return and are often linked to the performance of a large index, such as the FTSE 100 or S&P 500. They typically have preset conditions meaning that the return could be delivered over a specific period if certain criteria are met. Generally, they offer lower volatility compared to equities and can deliver strong returns; however, they can also result in capital losses if the underlying market conditions are not met.

• Absolute Return Funds: The nature of this investment strategy is to aim for a positive return during all market cycles. They can do this because they are able to short equities - meaning they can sell them and buy them back - aiming to benefit from negative share price performance.

Real Estate

This is one of the more straightforward areas within a portfolio and is typically accessed through Real Estate Investment Trusts (REITs). We often do not have significant exposure here as our clients typically own their own property or hold other personal property investments.

However, real estate can be very useful within a portfolio to provide attractive yields and inflation-linked leases to benefit over different market conditions. This is generally achieved through commercial real estate, which can include supermarkets, logistics assets or offices. This can be a great yield enhancer within the portfolio and is useful for providing reliable income.

Cash

This is typically our lowest exposure and is held in small quantities across our investment portfolios. We do sometimes hold more cash if we see increased risk in markets and believe a downturn may take place - allowing us to capitalise on a fall in asset prices - but typically, we run small cash balances.

Summary

Overall, all the above asset classes provide differing return styles and offer varying risk-reward profiles. Our view is that a blended approach to the assets held within an investment portfolio act as a strong enhancer to performance over the long term.

We work closely with clients to understand their risk profile, investment objectives and financial situation to build a portfolio that best suits their needs and incorporates the right mix of assets.

This is a very high-level and generalised view of the varying asset classes, and there are plenty of quirks to consider. If any of these asset classes spark interest in you, or if you want to discuss your portfolio or any of the topics covered here, please do not hesitate to contact me using my contact details below or one of our investment managers at Walker Crips and we would  be happy to discuss further.

Ben Potter, CGMA ASCI
Investment Manager

If you would like to discuss this topic more, contact Ben at [email protected] or call 020 3100 8180

Important information
This article is intended to be an education piece by Walker Crips Investment Management and should not be taken as advice. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this document constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority (FRN:226344) and is a member of the London Stock Exchange. Registered office: 128 Queen Victoria Street, London, EC4V 4BJ. Registered in England and Wales number 4774117.