From 1990 to end 2006, a widely diversified portfolio across mainstream sterling cash, bond and equity markets would have delivered an average 9 per cent per year, according to a new study from Edinburgh investment managers Charlotte Square.

The study details the volatility and related risk characteristics of portfolio performance over the seventeen years from 1990 to 2006 and over a series of shorter run horizons, in particular the bear-bull rollercoaster of 2000 - 2006.

It looks at shifts in asset class correlations and considers the long run outcome of several alternative portfolio strategies. It aims to give financial advisors a long run perspective on investment portfolio planning for their clients.

Expectations, Realism and Patience is a comprehensive review of sterling returns across eleven broad asset classes from 1990 to 2006. It highlights the wide swing in fortunes over market cycles and the speed with which asset class leadership can turn. It demonstrates the scale of the gap, year by year, between sector leaders and laggards, and shows the difficulty of consistently picking asset class winners.

The firm says that the report confirms the fundamental importance of a well-diversified fund at the heart of the investment portfolio and believes that with guidelines like these at hand, investor and financial adviser can turn to their investment manager with much greater purpose.

Based in Edinburgh and formed in 2003, Charlotte Square is led by William Forsyth and Edmund Clark, both previously with Rathbone Brothers, and offers discretionary and advisory investment management services to private clients and to financial intermediaries.

Funds under management are in excess of £50 million ($99 million).