Combining asset categories that have a low correlation reduces the volatility of the portfolio as a whole and allows the portfolio manager to invest more aggressively.
Not exact matches
Foreign large - blend funds, for example, had inflows of $ 21.3 billion and collected greater inflows than the next four top -
asset - gathering
categories combined in July.
The solution may be to
combine them for stronger and more consistent inflation protection and diversification through risk management provided by the mix of not only real
asset categories but by the
asset class mix, including bonds and commodity futures in addition to stocks.
Proper
asset allocation works by reducing portfolio volatility and / or increasing long term returns when non-correlated
asset categories are
combined.