Asset Allocation

In diversified portfolios, the vast majority of the difference in long term investment returns depends on the allocation of your assets to different types (asset classes) of investments - not the managers or specific securities.

The basic asset classes are fixed income (bonds and CDs) and equities (stocks). These define the basic financial "deal" i.e. whether you are a lender or a part owner of businesses. Each of these basic classes has segments which further define the expected risk and return. In fixed income, the major elements which define segments are credit quality and maturity. In U.S. stocks, the major distinctions are size (large, medium and small) and investment style (growth, value or blended). In addition to basic U.S. stocks, equity asset allocations usually include real estate securities and international stocks.

Our investment approach is to work with clients to understand their investment goals and needs and to develop an asset allocation which is designed to blend the expected risk and return appropriate for those objectives. The asset allocations are based on modeling of long term returns, correlations and volatility of asset classes and categories.

We will provide you with complete information on the methodologies, including the limitations of the modeling before implementing any investments.