Building Globally Diversified Asset Class Portfolios - Show 35-4

Tuesday, June 12, 2012 3,497 views

Mark Hebner discusses building globally diversified asset class portfolios at IFA. The blend of investments that is appropriate for a particular investor is known as asset allocation, also called risk exposure, and is based on an investor's risk capacity. Asset allocation is the most important factor in optimizing a portfolio's expected returns, thus it is essentially the most important decision an individual or institutional investor can make.

Here Mark shows how US stocks, non-US stocks, fixed income and real estate comprise an IFA portfolio. A diversified portfolio which captures the right blend of market indexes reaps the benefit of carrying the systematic risk of the entire market while minimizing exposure to the unsystematic and concentrated risk associated with individual stocks and bonds, countries, industries, or sectors. The only risk that remains is the risk of the market itself, a risk that must be taken in order to capture market returns.

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