What Drives Our Asset Allocation
Asset Allocation is Defined By:
The Balance…
Analysis of the three inputs below determine the appropriately tailored balance. Balance is essential in navigating the investment environment where the only true constant is change.
…And the Bias
Ever-changing macroeconomic factors influence our biases and underscore the importance of alternating the emphasis of a portfolio’s power amongst three broad classes of assets. We constantly evaluate the vehicles within each asset class that support our biases as we strive to fulfill investment objectives and propel toward established goals without taking excessive risk.
Need for Income
Time Horizon
Tolerance for Fluctuation
Equity Assets
(Stores of Optimism)
Domestic and International Common Stocks, Mutual Funds & ETFs
Fixed Income Assets
(Stores of Income)
Corporate, municipal and government bonds, both domestic and international, both individual and pooled securities
Alternative Assets
(Stores of Value)
Negatively correlated
non-traditional asset classes
Projected Returns =
Corporate Earnings + Inflation + Dividends + Multiple Expansion / Contraction
Interest Rates – Low vs. High
Fed – Accommodative vs. Restrictive
Economy – Growth vs. Contraction
Spreads – Tight vs. Loose
Full Valuation of Traditional Asset Classes
Investor Sentiment
Geopolitical Instability