The big picture, literally

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When we ask what your portfolio looks like, we mean it literally. We find that a visual representation of a few critical metrics can tell us a lot about your portfolio and how it can be expected to perform.  Let’s take a look at a hypothetical portfolio, in pictures.

We know that the risk and return of an investment portfolio is overwhelmingly determined by a few simple metrics of asset allocation. First, the distribution of assets across the four primary asset classes – stocks, bonds, alternative investments, and cash. As these four asset classes typically perform differently in any given investment environment, owning a mix of assets reduces overall portfolio volatility. For instance, inflation may be bad for bonds, but good (in small amounts) for stocks.

How much in each basket?

Last week we discussed how we use Windham software to set specific allocations to different asset classes based on client goals and needs. There’s a lot of science behind portfolio optimization, but it all starts with the high level allocation that is depicted in the first pie chart. Watching this chart over time also easily identifies when it’s time to rebalance.

Dollars, euros or yuan?

Markets are global. Is your portfolio? The US/non-US pie chart captures a portfolio’s level of international diversification, but also indicates exposure to currency risk. That dollar/non-dollar split should be set by design, not default, and is unique to each investor.

Get a visual check-up

Thanks to the spreadsheet tools created by Max Osbon for our clients, we can provide an excellent graphical analysis of your portfolio, and we’d be happy to do so, without obligation. It’s a great starting point for fine tuning the risk and return characteristics of your portfolio, or building a new portfolio that better matches your goals and needs.

One quick picture is worth a thousand words.  If you’d like us to take one for you, click here and we’ll respond.


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This article may include forward-looking statements. All statements other than statements of historical fact are forward-looking statements (including words such as “believe,” “estimate,” “anticipate,” “may,” “will,” “should,” and “expect”). Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Various factors could cause actual results or performance to differ materially from those discussed in such forward-looking statements.

Nothing in this article is intended to be or should be construed as individualized investment advice. All content is of a general nature. Individual investors should consult their investment adviser, accountant, and/or attorney for specifically tailored advice.

Any references to third-party data or opinions are listed for informational purposes only and have not been verified for accuracy by the Adviser. Adviser does not endorse the statements, services or performance of any third-party vendor without specifically assessing the suitability of a third-party to a client’s or a prospective client’s needs and objectives.

Portfolio allocations shown are for illustrative purposes only.  Client allocations may differ based on their specific investment objectives.

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