Asset Allocation

Asset Allocation
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Asset allocation is the most important investment decision. Simply put it the answer to the question, "how much of my saving do I put in different asset classes so that I meet my goals without taking risks that can give me sleepless nights?". Traditionally asset allocation is done by first understanding your willingness and ability to handle risk. You will fit into one of the three categories- conservative, moderate or aggressive. The allocation to equity-debt is typically (in %) 40-60, 50-50 and 60-40 respectively. This is held constant and portfolios rebalanced to maintains this mix. This ensures the right emphasis is put on earning returns and the security needs of an investor.

Omega starts with a core allocation but does not hold it constant for all levels of the market. Using Moneyworks4me's market level assessment Omega makes smart asset allocation changes. Omega decrease the allocation to equity when the market has clearly moved into higher levels thereby reducing portfolio risk/draw-downs when the market corrects. Similarly Omega increases allocation to equity when the markets become attractive. This ensures you are able to take advantage of lower equity prices.

Why do you need asset allocation?
Asset Allocation vs timing the market?

Asset Allocation

Asset allocation is the most important investment decision. Simply put it the answer to the question, "how much of my saving do I put in different asset classes so that I meet my goals without taking risks that can give me sleepless nights?". Traditionally asset allocation is done by first understanding your willingness and ability to handle risk. You will fit into one of the three categories- conservative, moderate or aggressive. The allocation to equity-debt is typically (in %) 40-60, 50-50 and 60-40 respectively. This is held constant and portfolios rebalanced to maintains this mix. This ensures the right emphasis is put on earning returns and the security needs of an investor.
Omega starts with a core allocation but does not hold it constant for all levels of the market. Using Moneyworks4Me's market level assessment Omega makes smart asset allocation changes. Omega decrease the allocation to equity when the market has clearly moved into higher levels thereby reducing portfolio risk/draw-downs when the market corrects. Similarly Omega increases allocation to equity when the markets become attractive. This ensures you are able to take advantage of lower equity prices.
Why do you need asset allocation?
Asset Allocation vs timing the market?