Stay On Track With Asset Allocation
Over the past several years, we have experienced a type of investor euphoria. We’ve seen unprecedented growth and minimal market volatility in what is now the second longest bull market in history. Sometimes, an investing environment like this can create investor complacency, which brings us to a topic that we would like to discuss.
At Collins Investment Group, we like to see a climbing stock market just as many investors do. But we have not grown complacent. We have been preparing for the potential of market volatility through proper asset allocation of our clients’ portfolios.
While experiencing such a bull run as an individual investor, you may find that your portfolio’s allocation is now significantly different than your actual risk appetite and investing goals. As a part of an actively managed program with Collins Investment Group such as Private Investment Management (PIM), your portfolios are periodically rebalanced to ensure that your investments remain aligned with your objectives.
In the following example, this investor began in a Moderate Growth and Income portfolio with a 60/40 stock and bond allocation with a historical return of 10.2% and 5.8% standard deviation.
After five years in the bull market as an individual investor that failed to periodically rebalance, they could now have a portfolio with a 74/26 stock and bond allocation that has a historical return of 12.2% and 7.1% standard deviation. This portfolio has now shifted from Moderate Growth and Income towards Aggressive Growth and Income. This could potentially lead to undesired market correlations and ultimately undesired investing results. In other words, if volatility were to return to the market, the investor may experience more portfolio fluctuation than they had originally planned for.
Remaining disciplined and periodically rebalancing your portfolio is a critical part to long-term portfolio management. It will help you maintain your desired level of market risk and ensure that your allocation remains consistent with your goals. We encourage our clients to have ongoing conversations with our team about any changes in your financial goals around family or life events so that we can continue to position your portfolios to help you achieve those goals.
*Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns.
Welcome to the Team!
We are pleased to introduce you to our newest team member, Aeda Chung. Aeda joins our team as a Client Services Specialist who will help our team continue to provide you with the highest level of service that you’ve come to expect.
Aeda earned her B.S. from Cornell University and M.B.A from the Robert H. Smith School of Business, University of Maryland.
She has several years of industry experience and previously worked with UBS-Private Wealth Management where she was responsible for all client service requests and day-to-day operations.
In her role with Collins Investment Group, Aeda will specialize in:
- Account Opening and Maintenance (e.g. estate and trust accounts, 529 accounts, and UTMA / UGMA accounts)
- Asset Consolidation
- Day-to-Day Client Services
Aeda is looking forward to working with and getting to know all of our clients. If you haven’t already had the pleasure of meeting or speaking with her, give our office and join us in her warm welcome.