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Portfolio advice

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  • chiang_mai
    chiang_mai Posts: 217 Forumite
    Seventh Anniversary 100 Posts Combo Breaker
    edited 31 May at 12:44AM
    dunstonh said:
    For the benefit of anyone who is interested, linked below are some of the asset allocation reports by major banks and investment houses. If you read them all and compare, you'll see some common themes, you'll also see plenty of evidence of tactical responses to developing economic and political scenarios, some of which endure for several quarters. My point in this thread is, if the majors have tactical scenarios, why shouldn't the average investor. Being hamstrung by the notion that an asset allocation is for life, doesn't seem like a sound idea to me.

    https://am.jpmorgan.com/us/en/asset-management/adv/insights/portfolio-insights/asset-class-views/asset-allocation/

    https://www.lseg.com/content/dam/ftse-russell/en_us/documents/market-insights/asset-allocation/asset-allocation-insights-march-2025.pdf

    https://professionals.fidelity.co.uk/page/global-asset-allocation-insights

    https://www.blackrock.com/us/financial-professionals/insights/investment-directions-spring-2025

    https://www.brownadvisory.com/us/insights/2025-asset-allocation-perspectives-outlook


    Some of those are for investors domiciled in USD.

    You don't have to stick with a single asset allocation model for life.   Tilting away from market capitalisation is not uncommon and can be very successful or it could produce less.   In a cycle where US equities is best, tilting may not yield as much if you tilted away from US.    However, in a cycle when US is not the best (which as we know happens in alternating cycles) then tilting away from US would be more successful.

    Tilting doesn't tend to refer to extreme changes though.  Its is as the name suggests, a tilt in the direction away or towards.
    I did not intend to imply that tactical adjustments should be extreme, they were so in my case but only as a one off event that was a step change. I had lost control of several aspects of my portfolio, one of which was my ever upwards creeping US allocation (I hadn't rebalanced in a long time because the results were positive). I almost welcomed the markets correction to start afresh. I also did not mean to imply that asset allocation adjustments should be made with every news headline, although tilts might be appropriate, several times per year.

    Geoff is entirely correct when he says that markets are highly correlated, hence the benefits of geographic diversification are not as great as they once were although it does provide a damping or smoothing effect and reduce portfolio volatility. I've recently put effort into trying to understand the best ways to diversify by sector, as well as geography, since several sectors have an inverse relationship. The problem with that is the complexity and the fact that some useful sectors are not very profitable.  All great stuff as an interesting hobby, thank goodness I don't have to make a living from it! Many thanks to all for the useful tips and comments.
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