One way to help avoid obsessing over the performance of individual assets in a portfolio is simply to hold an all - in - one fund that
combines different asset classes in a rational fashion.
Many well - established providers like Vanguard and Direxion have hopped on the bandwagon through new product offerings that
combine different asset classes or rotate between sectors.
Not exact matches
The question of
combining all these
asset classes and
different investments in each becomes how do you do it without paying a mountain in commissions.
Most of us
combine stocks and bonds so that we have
different asset classes that balance each other out during periods of volatility.
That higher return has come with higher volatility, but by
combining several
different asset classes that are at least somewhat uncorrelated, or better yet negatively correlated, a higher return per unit of risk is possible.
Since
different asset classes out - perform and underperform in
different situations and under
different economic conditions, by
combining asset classes, this portfolio aims to provide both growth as well as stability.
Combining equities and fixed income investments within a portfolio helps to smooth out its returns because these
asset classes have
different risk and return characteristics.