Your strategic asset allocation will be your starting point before venturing into the stock market but the coming end of expansive fiscal and monetary policy and the high valuation of U.S. growth stocks may require a different implementation of your asset allocation.
Category: Portfolio Management
We cannot ignore the current relative valuation and future prospects of Chinese equities, despite the risks. Options, even if imperfect, remain an indirect exposure and a diversified investment in emerging markets.
We strongly recommends physical ETFs, even if in some exceptional cases, synthetic ETFs may be more appropriate in certain circumstances.
The basic rules of the markets will hold true beyond any investment model: the importance of diversification, mean reversion of returns over the long term, and the difficulty of creating alpha in public markets.
In times of low interest rates, structured products attract investors with comparatively higher returns, but there is also the threat of painful losses.
The world’s largest sovereign wealth (Norway) believes in relatively efficient markets and follows a passive approach with a 70:30 stock:bond index and little deviations.
The Canadian investment model advocates internalized wealth management and assets hedging liability and inflation (such commodity producer stocks, real estate, and infrastructure).
High valuations make it improbable to repeat the recent high returns in stocks and bonds and investors need to manage their return expectations accordingly.
In contrast to the Yale model, a passive approach has produced the best returns over the past decade and is likely to remain the best investment strategy in the future for individual investors.
Like private investors over the last decade, the vast majority of institutional investors would have been better off managing their funds passively with negligible costs.
Guide Finances 