Prudent asset allocation decisions are critical in developing a plan to meet long-term investment objectives.
There are thousands of investments to choose from ranging across every sector of the stock and bond markets along with Alternative Investments. Allocating your assets based on performance alone is often ill advised. That’s because one year a particular type of security can be a star performer, only to severely under-perform the next year. Asset allocation is an investment strategy that attempts to balance risk and reward by periodically adjusting the percentage in different, and ideally uncorrelated, asset classes.
While asset allocation does not assure profits or prevent losses in a declining market, the goal of diversification is to reduce portfolio volatility. At Provo Financial Services, we leverage LPL Financial’s research and product suite to create portfolios diversified across both Traditional and Alternative asset classes. Correlations between asset classes globally have been steadily increasing. We believe diversification through proper asset allocation is still a relevant goal, but accomplishing this, as traditional asset classes become more correlated, requires a change in thinking. Learning from institutional investors, pensions and endowments, we believe that Alternative assets and strategies will play an increasingly significant role in providing diversification going forward. To review or discuss asset allocation within your portfolio, please schedule an appointment with us today.
Alternative investments may not be suitable for all investors and should be considered as an investment for the risk capital portion of the investor's portfolio. The strategies employed in the management of alternative investment may accelerate the velocity of potential losses.