Building a resilient portfolio

Jeffrey Knight, CFA, Head of Global Asset Allocation | July 16, 2013

  • Diversification is the single most important tool an investor has to improve their portfolio’s resilience to negative events.
  • Now is an opportune time for investors to look at ways to protect year-to-date gains and prepare for monetary policy changes.
  • Video: Two investment opportunities that may help stabilize portfolios today.

Diversification is the single most important tool an investor has to improve their portfolio’s resilience to negative events. Of course, diversification has been a central topic in investment strategy for many decades and has worked well. However, the fine points of diversification have advanced significantly in the last 10 years and it’s no longer viewed as simply allocating investments among global stocks and bonds.

Modern portfolios now combine not just stocks with bonds, but financial assets with real assets, traditional investments with alternative investments and passive strategies with active strategies. Furthermore, the diversification process has advanced so that savvy investors now determine allocations to various asset classes with an eye toward balancing risks, not capital. With today’s higher portfolio values, it’s an excellent occasion for investors to rebalance among asset classes and strengthen their portfolios.

Watch: Two investment opportunities that may help stabilize portfolios today.


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Diversification does not assure a profit or protect against loss.