Investment Philosophy
Asset Allocation / Diversification
Individuals, foundations and family offices can derive benefit from Barrington’s investment road map. The investment roadmap allows us to custom-tailor an investment program just for you. Asset allocation and diversification feature prominently in a tailored strategy. To be effective, asset allocation must be dynamic.
Asset Allocation
We believe that asset allocation is more important to overall performance and volatility reduction than almost any other decision. Each investor’s allocation is different depending on his or her combination of goals, time horizon, and risk tolerance. Your own allocation might utilize some combination of equity, fixed income, alternative strategies, cash equivalents and real estate-related investments.
Diversification
Diversification means achieving a blend of individual investments within asset classes to accomplish a specific risk/reward goal. To be effective, diversification should dynamically reflect the future probabilities, not look backward at the past. These Asset Allocation Wheels are examples of allocations that may be appropriate for some investors at a point in time. An investor’s particular goals, circumstances, and risk tolerance will dictate the appropriate allocation for that investor. The Allocation Wheels are presented here only to reflect how diversification may look under a given set of circumstances. All investments have some risk. Some of these strategies have more risk than traditional investments.
DIVERSIFIED ALLOCATION EXAMPLE: December 31, 2011
This grid of returns for nine asset classes features the best performing asset classes at the top and the worst performing asset classes at the bottom, of each year. Clearly, diversification reflective of the economic environment can moderate volatility.
Click chart to enlarge.