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The 70/30 portfolio is sometimes seen as a replacement for the 60/40 asset allocation model. With a 60/40 portfolio, 60% of assets are allocated to stocks while 40% are allocated to bonds.
In finance, the Black–Litterman model is a mathematical model for portfolio allocation developed in 1990 at Goldman Sachs by Fischer Black and Robert Litterman, and published in 1992. It seeks to overcome problems that institutional investors have encountered in applying modern portfolio theory in practice.
Example investment portfolio with a diverse asset allocation. Asset allocation is the implementation of an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor's risk tolerance, goals and investment time frame. [1]
Under the model: Portfolio return is the proportion-weighted combination of the constituent assets' returns. Portfolio return volatility is a function of the correlations ρ ij of the component assets, for all asset pairs (i, j). The volatility gives insight into the risk which is associated with the investment.
An asset allocation is a financial road map that shows you where to put your money based on your own investment objectives, risk tolerance and time horizon.
Model portfolios often include asset-allocation or fund-selection recommendations for multiasset portfolios, according to Morningstar. Some may offer security selections in certain asset classes ...
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