Times change. Markets change. Strategies change. Are your portfolios keeping up?
If you subscribe to traditional asset allocation approaches such as Modern Portfolio Theory (“MPT”) which was developed in the 1960’s, the answer is likely, not so much.
Today's markets, which are driven by computers and can change direction at the drop of a hat, demand a modernized method to portfolio construction. It is for this reason that we focus on a modernized approach to portfolio design and diversification.
Investors have learned that global markets today tend to be highly correlated - especially during times of stress. As such, the days when investors could simply spread their portfolio across asset classes such as stocks, bonds, foreign markets, gold, real estate, etc., in an effort to create diversification in their portfolios, appear to be long gone.
TFA subscribes to a more modern approach.
Instead of diversifying by asset class alone, TFA utilizes a modernized portfolio design technique that diversifies portfolios across investing styles, portfolio strategies, investment managers, time frames, geographical regions, security type, and, of course, asset classes.
Although there are never any assurances in investing, the overarching goal for the TFA portfolios is to provide consistent, long-term results. In addition, while day-to-day volatility in markets cannot be avoided, TFA strives to create a smoother ride by working to (a) participate in bull markets and (b) preserve capital during severely negative market cycles.