How do the AJ Bell Ready-made portfolios work?


The AJ Bell Ready-made portfolios are built by our in-house team of experts. Here’s how we go about it…

The first step – asset allocation

When building each Ready-made portfolio, the first step is deciding its asset allocation. Put simply, asset allocation is the proportion that each asset (e.g. bonds, shares, property etc.) takes up of the whole portfolio.

And asset allocation is all-important because it determines the overall level of risk and return in a portfolio. Choosing more conservative assets (such as bonds) means the portfolio has greater stability, but less potential to grow over the long term. Choosing more volatile assets (such as shares) means the portfolio has greater potential for growth over the long term, but with more ups and downs along the way.

The art of building the Ready-made portfolios is getting this balance right for each portfolio. There are four portfolios – three to suit cautious, balanced and adventurous investors, and one to suit investors after an income.

So how do we work out the asset allocation?

We begin by crunching the numbers to find the asset allocation that suits each portfolio. We do this by analysing the expected returns for each asset type over the long term, then using a mathematical model to find a proportion of assets that work well together, are sufficiently diverse, and match the portfolio’s investing goals. 

To keep the Ready-made portfolios simple, the assets we include are limited to UK bonds, UK shares, global shares and commercial property.

The next step – picking the funds

Once we decide the overall asset allocation, the next stage is picking the funds to fit. Each fund focuses on a certain asset type or sector, so by combining the right funds, in the right proportion, we can meet our asset allocation.

And to make sure each Ready-made portfolio is of the highest quality, we only pick funds that qualify for the AJ Bell Favourite funds list.

That’s because the AJ Bell Favourite fund list is our pick of the best funds for the medium- to long-term. Deciding which funds qualify for our list is a painstaking process, in which we continually analyse hundreds of funds, and interview hundreds of fund managers. That way, we can be confident about every fund we pick.

To ensure the Ready-made portfolios are easy to manage, each is made up of no more than 6-7 Favourite funds. When you buy your Ready-made portfolio, it's these 6-7 funds that are added to your account - the Ready-made portfolio is not ring-fenced from your other investments.

Who are our in-house team?

Our in-house team have more than 60 years' combined experience managing funds for retail and institutional investors. With their lengthy expertise, they create time-saving investment solutions that make it easier for you to invest your money in the markets.

As well as the AJ Bell Ready-made portfolios, this includes the AJ Bell Favourite funds and the AJ Bell Passive funds.

Because all markets change all the time, we review the choice of funds in each Ready-made portfolio regularly, making the changes or updates we think are necessary. If we decide to remove a fund from the Favourite funds list, or make changes to the Ready-made portfolios, we’ll update our website to let you know the details.

Meet our investments team

How do I get started?

It's easy to buy a Ready-made portfolio. Just choose the portfolio that suits you and enter the amount you wish to invest. But before you choose, remember to do your own research – the Key Investor Information Document (KIID), fund factsheets and AJ Bell reports are available to help you.

Before you buy, you can adjust your portfolio's asset allocation, and add other funds from the Favourite funds list. Just keep in mind that this will change your portfolio's projected performance, meaning it no longer meets the original portfolio's objectives. Have a look at the 'Asset allocation and rating' and 'Performance' tabs to see the impact of any changes you make.

The portfolios have been designed as long term investments and operate on a fully invested basis. This means that there is no long term allocation to cash, as over the long term, it is likely to deliver a return below inflation. You will need to keep enough cash in your account to meet our charges, which aren't covered by the asset allocation of the portfolios.

What happens next?

Once you buy a Ready-made portfolio, the responsibility for managing it rests with you.

Keep in mind we've designed each portfolio to be held over the long term: five years or more. However, we do suggest that you review it from time to time. If market movements change your portfolio significantly, you can have a look at the asset allocation for your chosen portfolio on the Ready-made portfolio page to help you rebalance it. 

View the AJ Bell Ready-made portfolios

Important information

Once you've invested in an AJ Bell Ready-made portfolio, responsibility for managing it rests with you. So you need to be sure you have the time, and confidence, to do this. Each portfolio is designed to be held for five years or more. And the funds we've chosen in each one are guidance only- and not a personal recommendation.