START WITH AN ASSET
Begin at the end—What’s the goal?
What are they trying to accomplish?
How much risk are they willing to take?
When will they need the money?
A portfolio should be a reflection of each investor’s goals:
What are your goals?
When will you need
What is your risk
DIVERSIFY TO SMOOTH
OUT THE RIDE
In the last 15 years, investors endured a global financial crisis, numerous geopolitical conflicts, a global pandemic and two major market downturns.
Through it all, a well-diversified portfolio of stocks, bond and other uncorrelated asset classes delivered one of the smoothest rides for investors.
on a well-diversified
portfolio, over the
past 15 years.
Stay on course; don’t “set it and forget it”
REBALANCE TO STAY
As markets shift, so do allocations. Without
rebalancing, investors overtime can become
overexposed to unwanted risks.
Create a rebalancing policy
It is important to create a formal rebalancing
policy and follow it faithfully in order to keep
assets on original targets.
Rebalancing on schedule to help
maintain strategic allocation
USE THE 4 Ps FRAMEWORK TO
There are many factors to consider
Who’s managing the strategy? What are
their experiences and capabilities?
How does this strategy try to pursue
objectives and invest shareholder money?
What is the strategy trying to achieve?
When would this strategy likely
CHOOSING THE APPROPRIATE
INVESTMENT IS KEY
Big gaps between top and bottom performers
Given the wide array of approaches available, mutual funds and ETFs in the same category may deliver vastly dIfferent results
Compounded over time, this gap can have a big impact on a portfolio’s dollar value.
Dig deeper into performance
Of the 4 Ps, focus most closely on performance. But evaluating performance involves much more than simply looking at recent returns.
Other factors to consider include consistency, risk and performance relative to benchmarks and peers.
between top and
LARGE CAP GROWTH
PUT IT ALL TOGETHER
The whole is greater than the sum of its parts
To build a portfolio that can withstand ups and downs, all six components in the process must work together to achieve the desired result.
with an asset
to smooth out
to stay the course
USE THE 4Ps
investment is key
The 60-40 portfolio has drifted
9% in just one quarter
PUT PORTFOLIO CONSTRUCTION INTO PRACTICE.
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