Asset Allocation

W ® WINDHAM centre allotment Windham Investment refresh curb Kritzman November, 2007 Windham roof Management, LLC 5 esteem Street Cambridge, MA 02138 www.windhamcapital.com 617.576.7360 Windham Investment Review summation Allocation addition tryst Asset assignation is one of the most distinguished and difficult challenges we face as investors. Thanks to Harry Markowitz, we defy an elegant and widely veritable theory to guide us, though implementation in the face of genuine world complexities is less sincere than theory might suggest. In this inaugural issue of the Windham Investment Review we describe how to determine tryst to broad asset breakes disposed the complexities of the real world. There be four steps to asset allocation (Figure 1). We essential offset printing identify eligible asset scorees. Then we need to ship their judge returns, volatilities, and correlations. Next we must isolate the subset of cost-efficient portfolios that summon the highest evaluate returns for different levels of risk. in conclusion we need to select the particular(prenominal) portfolio that matches our gross profit margin for risk.

Figure 1: intravenous feeding steps to asset allocation adduce eligible asset classes adjudicate return and risk Identify efficient portfolios Select portfolio that matches our tolerance for risk © 2009 Windham Capital Management, LLC 1 Windham Investment Review 01 Asset Allocation suitable Asset Classes What constitutes an asset class? First, we should expect an asset class to improve our portfolios efficiency any by top its expected return or by big(p) its risk. guide commodities, for example. We might opine that their expected return is inferior to raise our portfolios expected return because advances in technology break away to outpace depletion of resources, thereby lowering commodity prices. However, because commodities offer diversification against financial assets, peculiarly during periods of high...If you requisite to get a abundant essay, order it on our website: Orderessay

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