Category: Asset Allocation

Revised asset allocation management objectives can improve outcomes by revising the objectives of the portfolio to match the client view. Rather than a 2-dimensional income versus growth view, we believe the difference should be defined by adding a third dimension, stability. See the full report with tables at: Client Service > Asset Allocation > Americas > USA Asset Allocation

The Dynamic CMA USA Portfolio asset allocation is designed to use the information gained from relative valuations to adjust asset allocation within the portfolio. The alignment moves toward increasing conservativeness as market and sector valuations approach overvalued positions and moves toward higher aspirational positions when market valuations move toward undervalued positions.

Investment Strategy Network has added another dimension to the asset allocation process. Traditionally, increasing stability or advancing opportunity (risk/return) has been accomplished through adjusting allocations amongst cash, bonds and stocks. Bonds are increased to improve stability, reduce risk and stocks are increased when opportunities are sought along with a willingness to accept higher fluctuations in value levels (volatility). Individual stock selection can also be adjusted along with the asset allocation to enhance stability or improve opportunity. By using the two as an integrated combination rather than individually, greater alternatives are available and more opportunities are generated.

This report offers a discussion on a practical method of how asset allocation can be used to satisfy an investor’s desire for stability and opportunity within an investment portfolio. It is our objective to create a solid basis for understanding changes in allocations when considering objectives, risks and market characteristics.