Asset Allocation To reduce Risk by adding uncorrelated
Asset Allocation To reduce Risk - by adding uncorrelated assets Traditional assets Used EQ/Bonds/RE/PM/Alternatives Purpose of asset allocation more than returns has to do with its behavioral impact on the participant.
Performance of assets
Performance of assets
Based on past performance and long term returns one should stay 100 pct in equities. But can the participant handle it behaviorally, is KEY Asset allocation helps in smoothening out the volatility in the portfolio without giving up much of the returns.
Should one remain in single Asset strategy : YES Can one remain in single Asset strategy Maybe No !
How to identify trends Relative Momentum / Dual Momentum Identify trends using price charts/ highs and lows Reversal / Continuation patterns Or Go with fixed allocations and balance every year
How to identify trends Relative Momentum / Dual Momentum RM : Identify relative ROC over time between a set of asset classes and chose a rule based system to switch from one to the other based on the ROC Gary Antonacci – Dual Momentum Book - portfolio of Equities and Bonds changing allocation as per absolute but comparable momentum For ex Ex ROC eq >8% / ROC Bonds> 5% >> Buy equities Exit if any hits <3% ROC
How to identify trends Trend recognition using highs and lows
How to identify trends Reversal Chart Patterns
How to identify trends Reversal Chart Patterns
How to identify trends Continuation Chart Patterns
SIMPLE EQUAL ALLOCATION
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