Finance

Aggressive Investment Strategy

Aggressive Investment Strategy

A set of rules, behaviors or procedures, designed to guide an investor’s selection of an investment portfolio is known as an investment strategy. It guides an investor to take decisions based on goals, risk tolerance, and future needs for capital. Investment strategies can seek rapid growth where the main aim of investors is capital appreciation. Alternatively, it can also follow a low-risk strategy wherein wealth protection is their main aim.

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What is an Aggressive Investment Strategy?

Aggressive Investment Strategy is a style of portfolio management that attempts to maximize the returns by taking higher risks. It mainly involves stretching an investor’s risk appetite and taking higher risks for higher returns. The main focus of this strategy is capital appreciation and not capital protection. Under this investment strategy, a portfolio employs various strategies across various asset classes.

Types of Aggressive Investment Strategies:

  1. Private Equity Investments
  2. Options Trading
  3. Microcap Stock Funds
  4. Small-cap Stock Funds
  5. Foreign Stocks/ Global Funds
  6. Aggressive Growth Funds

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Risk involved:

  1. The majority of the portfolio’s holdings are in stocks and other risky assets such as futures, options, and commodities which are very risky.
  2. Investments are made in new asset classes such as Cryptocurrencies which are technology-driven and hence there can be hacks.
  3. Investing in Global stocks increases foreign exchange risk due to politics and movements in their economic cycles.

Bottom Line:

Before investing in any new asset class, it is important to understand the nuance of that asset class. If the portfolios are constantly monitored and rebalanced, it helps in reducing risks and earning high returns. Basically, this investment strategy is useful for investors who possess high-risk tolerance and are willing to work for longer time horizons.

Author: Urvi Surti

About the Author:

Urvi is a commerce graduate and has a keen interest in Finance. She has completed her Chartered Wealth Management (CWM) from the American Academy of Financial Management and is currently pursuing a career in Financial Risk Management (FRM).

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