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Asset Allocation

The process of dividing investments among different asset classes, such as stocks, bonds, real estate and cash, to optimize the risk-adjusted return of your portfolio.

A proven investment strategy for a diversified portfolio

Asset Allocation is an investment strategy designed to create a portfolio of diversified asset classes that seeks to maximize potential returns for a given level of risk. A diversified portfolio of low-correlated asset classes can offer better resilience to market volatility as the movement of individual positions has less effect on the overall performance of the portfolio.

A Closer Look

  • Strategic asset allocation-A long-term investment strategy, strategic asset allocation creates an optimal blend of asset classes while placing little emphasis on short-term market fluctuations.
  • Tactical asset allocation-The short-term component of asset allocation, tactical asset allocation attempts to capitalize on market inefficiencies to achieve superior investment returns.

At Frye Financial Center, we guide clients in implementing a strategic asset allocation to help you achieve your investment objectives and then tactically altering position concentrations as market conditions dictate.

Managing Volatility through asset allocation
With investing, as with any endeavor, certain risks are inherent. The goal of asset allocation is to decrease risk without substantially reducing overall performance. By constructing a blended portfolio of asset classes whose individual performances through different market cycles, do not move in unison, investors are better positioned to weather any potential volatility.

As shown in the chart at the end of this section, the top performing asset class tends to change year-over-year, reinforcing the importance of having a portfolio invested across asset classes. A diversified portfolio is therefore positioned to endure fluctuating market cycles and increases the likelihood of capital appreciation while reducing volatility.

 
     

 
 
 

To view the latest Stocks, Bonds, Bills and Inflation chart from 1926-2015, click here.

     
   
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20900 West Dixie Highway
Aventura, FL 33180
Phone: 305-931-3200
Fax: 305-931-9383

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