A portfolio is then custom designed with diversification among asset classes, regions and sectors according to ability and the willingness for risk. Near-term volatility is managed and minimized via strategy diversification, which accounts for important considerations such as risk drag and return patterns.Article content
Obviously, the higher the target return, the larger the width of this distribution curve — after all, there is no such thing as a free lunch — but it should be less variable than owning the broader market for equity investors or a traditional 60/40 portfolio for balanced investors. We made the switch to this approach approximately four years ago and haven’t looked back. We get a much more consistent investment return profile, which aligns with our client base that understands the philosophy and process.
We have also taken down our fixed-income exposure to the lowest allowable levels and replaced it with structured notes instead of going into more volatile equities or, worse, illiquid privates.
Great post