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The art of asset allocation


Diversification is a goal of nearly every portfolio manager and trading program. Even long-only mutual funds benchmarked to some broad market index claim to be diversified among large cap, mid cap and small cap equities, and to certain segments of the investing world that qualifies. People, however, realize that a long-only equity portfolio, while a solid part of any portfolio, is tied to equity markets and is not diversified. Diversified commodity trading advisors offer a more diversified stand alone investment than any long-only mutual fund, yet they know that they are just one portion of a wider portfolio. Prav Sambamurti, SVP, Ssaris Advisors LLC, says convergent strategies perform well in a normal market environment with stable to declining volatility when fundamental information is processed and interpreted rationally, whereas divergent strategies benefit from periods of imperfect information. The key to portfolio allocation is to have investments that will perform well in whatever economic conditions people may face.

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