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Whatever the percentage, asset allocation is a critical component of portfolio returns
“All good things must come to an end.” “What goes up, must come down.” Pick your aphorism. With the S&P 500 down more than 5% year-to-date and over 10% from recent highs to recent lows, this year is following a different path than 2021.
Market drivers may be changing or are at least showing signs of instability. Untested investment strategies that worked in past are not likely to generate future excess returns. Pretending to know when things will change is a fool’s errand.
There is no free lunch in investing. Proper diversification is the best strategy for reaching financial goals.
It has been said asset allocation determines about 90% of a portfolio’s return. While that figure may be distorted, a strategic asset allocation is still a crucial step in achieving financial goals. An allocation must make sense for each clients’ needs and risk tolerances. The correct allocation will consider both while supplying context for return and volatility expectations.
Asset allocation also provides comfort in knowing each portfolio is optimized for each client’s situation. There is no need to constantly react to market news. No need to make predictions about specific macro or company events.
We do not make market predictions. That's why we rely on diversification and constructing portfolios with a client-specific asset allocation.
Our partners at eMoney developed a short video on the topic.
This content was created by a third party. All opinions, comments, conclusions are of the author and not Jackson Creek Investment Advisors LLC. The information published herein is provided for informational purposes only and does not constitute an offer of investment advisory services. All information is subject to change without notice. Nothing contained herein constitutes financial, legal, tax, or other advice. These opinions may not fit to your risk and return preferences. Investment recommendations may change, and readers are urged to check with their investment advisors before making any investment decisions. Information provided is obtained from sources believed to be reliable, but we cannot attest to its accuracy. Past performance is not necessarily indicative of future returns. Investment advisory services are offered through Jackson Creek Investment Advisors LLC, a Registered Investment Adviser.