For most clients, high risk or speculative investments will not form a part of their portfolio.

 

However some clients are prepared to accept a high degree of risk, usually with a small part of their portfolio, in exchange for high potential returns.

 

High risk options

A straightforward approach is to build a portfolio of higher volatility funds with little or no exposure to the "safer" asset classes such as fixed interest securities, bonds etc.

The portfolios outlined in our building an investment portfolio section, with risk levels 8 or 9, would be an option here. These portfolios still retain some diversity across asset classes while offering the potential for high returns over the medium to long term.

Speculative options

For clients prepared to accept very high risks in exchange for the potential of substantial short term returns (100% in a year is not an impossible achievement) then engaging a trader to trade derivatives on margin for you is an option. We would not recommend that clients invest more than a small proportion of their portfolio in this way however.

We are not authorised to directly advise on or arrange this type of investment, though we have several contacts in the City who can tailor a service to you of this type. Incidentally, this type of trading is also an option for those who are looking to hedge an existing portfolio against potential losses (a portfolio of share options for example).