Investment Insights

Conventionally diversified portfolios can give a false sense of protection

(Citywire Middle East, 30 June 2022) Conventionally diversified portfolios can give a false sense of protection

Sticking to the conventional brokerage model of buying and selling simply because we can execute for you sometimes just does not work for clients, says Prashant Tandon, CEO & MD, Lighthouse Canton Capital.

‘Many investors have a false sense of diversification – they believe if they have 40% in bonds 40% equity and the rest in cash, then their portfolio is diversified. But the reality is that when market stress happens, correlation between asset classes becomes close to one,’ according to Prashant Tandon, chief executive officer and managing director, Lighthouse Canton Capital (DIFC).  

‘We saw this in 2000, and again during the taper tantrum period, and yet again during Covid. Which is why we focus our efforts on ensuring our people build strategies that align with our clients’ interest right at the very beginning from the portfolio construction phase,’ Tandon (pictured) told Citywire Middle East.

Tandon came to Dubai in 2017 and set up Lighthouse Canton Capital (DIFC) to lead the expansion of the Singapore-based Lighthouse Canton group’s operation into the UAE and Middle East.

The group, which provides clients both with wealth and asset management services, has more than 100 people across its offices in Singapore, Dubai and several locations in India and oversees – and has just north of US$3bn of assets under management (AUM) and advisory across the group.

In the region, the firm’s client mix is primarily composed of single-family offices and institutions with a healthy proportion of ultra-high-net-worth individuals and families.

‘Our growth in the UAE has been in tandem and in proportion as it has been for the group. In the last three years we have doubled our AUM every year,’ said Tandon, who also oversees the wealth management business for the firm.

Talking about how his team goes about engaging with clients step by step, he said, ‘Firstly, when we look at individual constituents, we don’t just focus on....

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