Strategic Asset Allocation for Optimal Investment Growth

Making the most of your portfolio takes planning. From locating investments to gauging risk and reward, asset allocation plays a big part in managing a balanced portfolio. At HighPoint Advisors, LLC, we help clients throughout Syracuse and Central New York regions find investment strategies that best suit their needs. Discover how allocation and diversification play out in your overall investment strategy.

Allocation Vs. Diversification

Asset allocation and portfolio diversification are key to managing risk vs. reward. While asset allocation refers to the percentage of each asset class in your portfolio, diversification refers to the different types of assets in your portfolio. There is no way to eliminate risk, but allocating and diversifying help create a well-balanced portfolio that performs efficiently.
Types of asset allocation strategies include:
  • Strategic asset allocation: A long-term investment strategy used to create a mix of assets that balance out over full market cycles.
  • Core-satellite asset allocation: A blend of strategic and tactical allocation, this strategy achieves a balanced blend of risky and conservative choices.
  • Tactical asset allocation: Locating a balance of investments with the potential for the most gains under any market condition.
  • Systematic asset allocation: This strategy is based on trends and market signals. It assumes the market is clear about available returns, relative return rates indicate market consensus and expected return rates provide clues to actual return rates.

Making Investment Choices

When investing, it’s important to consider your timeline, risk tolerance, and financial goals. For example, asset allocation in retirement planning will vary based on how far away retirement is for you and how much you’ll need to save beforehand. As you get closer to retirement, your portfolio should reflect choices with less risk potential to help maximize the wealth you’ve accumulated over the years. Assets are broken down into four basic classes:

Stocks

An investment in a company, stocks are securities sold by corporations to help fund their businesses. Individual stocks are called “shares.” When your stock price appreciates, you can sell it for a profit. If your stock pays dividends (not all do), payments are made to you, the shareholder. Stocks frequently fluctuate, making them a highly volatile choice and more appropriate for long-term strategies3.

Bonds

A bond can be considered a loan from investors to a corporation or government. Funds are used for business operations, and investors pay interest based on a fixed or variable rate. While less volatile than stocks, bonds often come with a lower rate of return. They can help balance out riskier investment choices in your portfolio4.

Cash Alternatives

Just as the term sounds, cash alternatives are assets that are substitutes for holding money in your wallet or checking account (CDs, U.S. treasury bills, money market accounts). They offer a low-risk, low-return choice for your portfolio5.

Strengthen Your Investment Strategy With A Professional

At HighPoint Advisors, LLC, we can help you create a customized portfolio built on sound asset allocation strategies. Contact us today to learn more about our services to clients across Syracuse and Central New York regions.

1. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification and/or asset allocation do not protect against market risk.

2. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification and/or asset allocation do not protect against market risk. Tactical allocation may involve more frequent buying and selling of assets and tend to generate higher transaction costs. Investors should consider the tax consequences of moving positions more frequently.

3. Stock investing includes risks, including fluctuating prices and loss of principal. Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company.

4. Bonds are subject to market and interest rate risk if sold before maturity. Bond values will decline as interest rates rise, and bonds are subject to availability and price changes.

5. CDs are FDIC insured to specific limits and offer a fixed rate of return if held to maturity, whereas investing in securities is subject to market risk, including loss of principal. The US government guarantees Treasury bills for timely payment of principal and interest and, if held to maturity, offers a fixed rate of return and fixed principal value.

An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Per SEC rule 482(b)(5), prospectus language must be in a type size at least as large as and a style different from (e.g., Italicized or bolded) that is used in a major portion of the materials.

All investing involves risk, including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification and/or asset allocation do not protect against market risk.

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