Asset Allocation: U.S. View
In this brief we offer 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.
The brief starts with a global view and then continues to refine focus until the allocation is centered exclusively on domestic sectors. At the end of the brief, there is a special section where consideration is given to portfolios that are concentrated in a single specific industry and how an investor can adjust a portfolio to reduce the impact of concentration.
Stock Consideration Report: U.S.
Four new Buy considerations and eleven new Sell considerations.
Portfolio: Global Index
An indexed portfolio is one of the most efficient methods of providing an investor the broadest exposure to the market for targeted or smaller size accounts.
The table in Figure 1 is an asset allocation consideration that uses individual index securities for global coverage. The allocation amongst the index securities is determined by using the relative fair value for each domestic sector, domestic market capitalization, international market and bond classification. Overvalued areas have a lower allocation while undervalued areas receive a higher allocation. Bond allocations are determined on a market weight, relative yield and long-term average return basis.
Stock Fair Value Report: U.S. Update
American Tower, Balchem Corporation and Lowes Companies all receive increases while AMAG Pharmaceuticals moves down.
Portfolio: U.S. Sector Only: LargeCap
This allocation results in a market weight, or near market weight (<0.5 percentage point difference) condition for: Energy, Financials, Health Care, Industrials, Information Technology, Materials and Utilities. Overweight positions for: Consumer Staples, and Telecommunication Services. Underweight positions for: Consumer Discretionary.