Asset Allocation in Transition
September 23rd, 2009
It seems that both strategic and tactical asset allocation is in transition. Strategically, conventional approaches used over the past 30 years are being called into question. Analysis of risk measures and correlation between asset classes are being challenged. A generally accepted new approach may emerge, but we haven’t seen it yet.
Tactically, there is evidence of some rebalancing into equities after the big drop, but not yet sufficient to return to pre-bear market levels, although the rally of the past six months has helped. Many investors have not taken the actions necessary to return their portfolios to their strategic allocation.
The severity of the recent market events will affect investor behavior for some time. One beneficial aspect of this period is that it will generate some new thinking around asset allocation which is likely to inform investors in the future.
Filed under: General
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