Add Some Zig to Your Zag

Diversification always seems to be a topic of discussion in the investment world, and everyone seems to need it, from individual investors to large institutional investors. Diversifying your investment portfolio involves adding a variety of assets that are not similarly correlated and move in opposite directions as market conditions change over time. Of course, theoretically, the more asset classes that you have in your investment portfolio should provide more stability in your portfolio’s returns. The goal is to find the ideal balance for you, or your organization’s needs, hopefully recognizing that the more stable your portfolio’s return the lower your return is likely to be. In today’s financial markets, the search continues for higher returning asset classes with more stability than the typical basket of stocks or equity-based index funds.

In general, most professional investors tend to go about achieving diversification in a comparable manner with large pension funds, for example, using mainly large company stocks and bonds along with some cash holdings in treasury bills or other instruments. More recently, pension funds have used private equity, real estate and in some cases infrastructure investments. Of course, diversification can also be achieved by investing in stocks and bonds with varied characteristics like size and credit quality in the case of bonds. An investor’s choice of what asset characteristics can be used as a means of diversifying one’s portfolio is wide and only limited by an organization’s resources or skill set. Not all professional investors believe that you need so much variety to achieve outstanding and stable returns. Take Warren Buffett, for example, who has most of his investment portfolio held in only a handful of companies and cash.

So, as an investor, you have a choice in how you choose to diversify your investment holdings. However, adding some zig to your portfolio’s zag might not be as easy as you think, particularly if you are looking for something new and creative with higher returns and less volatility than the overall market. Most investment solutions recommended to individuals as well as institutions are more or less generic and are generated through some sort of asset allocation model with various asset classes as input. The issue with this approach is that the best solutions are not included as inputs. Depending on your manager search and selection staff or consultant, you could be losing out on great investment options that are not being presented to you. Fortunately, our research has given us the ability to provide an outstanding equity-based solution to investment companies, insurance companies, and individual investors subscribing to our portfolio management newsletter.

Who is your organization’s gatekeeper? Are they allowing your organization to see all of the investment solutions that are available to you or your organization? Considering the extreme volatility in the current market, why not explore a market beating, low-cost investment approach that has significantly higher returns than any stock market-based index fund with lower risks. Add some needed diversification to your portfolio with a more complete and creative solution. Contact us today about our highly focused equity-based strategy that is certain to add some zig to your portfolio’s zag.