Odom News

Balancing Your Portfolio

Common investment advice is to ‘not put all your eggs in one basket’. What this means is that you want to hedge your risk by not betting on a single type of investment product or only one sector. If one market goes down, it does not take your entire portfolio with it. In more developed markets, these portfolios will likely consist of a mixture of assets and investments, from stocks, bonds, gold, land and real estate, pension or retirements funds and perhaps direct investment in a business or startup, or even newer entries such as crypto currencies. (See Fig. 1)

While growing, Cambodia still has limited investment options, putting more pressure on land and real estate, particularly residential real estate. This sector continues to be the primary asset within the country. This does not mean that diversification is not possible, but it does look different from other countries. An investment portfolio is likely weighted heavily towards land, residential real estate, business, and fixed deposit accounts. (See Fig. 2)

Odom offers a relatively new option to Cambodia with office condos. By introducing commercial office space into your portfolio, you are protecting yourself against risks in other sectors. If oversupply of residences reduces prices, or the economy slows, prime office space holds its value better, and can quickly recover as the economy comes back. New homes are always coming into the market, each one offering to be “more luxurious” than the last , but iconic, one-of-a-kind commercial buildings in central locations never go out of style.

The key is, as we say in English, “don’t put all your eggs in one basket”, keep your portfolio diversified. With the inclusion of commercial office space, you bring balance to your investments and more resiliency over the long term. (See Fig. 3)

Sample International Portfolio (Fig. 1)

But not all of of these investment vehicles are available in Cambodia (or easy to access)

Sample Cambodian Portfolio (Fig. 2)

A more standard portfolio in Cambodia may look like this, with a large portion in the real estate sector.

Well Rounded Cambodian Portfolio (Fig. 3)

But even in real estate, diversity helps hedge again one area being affected.