Portfolio Asset Allocation Strategies

Asset allocation refers to the balance between growth- and income-oriented investments in a portfolio. This allows the investor to take advantage of the risk/reward trade off and benefit from both growth and income. Building an appropriate asset mix plays a determinant role in a portfolio’s overall risk and return. A portfolio’s asset mix should reflect goals at any point in time.

Basic steps to asset allocation consist of:

• Choosing which asset classes (stocks, bonds, money market, real estate, precious metals, etc.)
• Selecting the ideal percentage (the target) to allocate to each asset class
• Identifying an acceptable range within that target
• Diversifying within each asset class

Asset allocation can be an active process to varying degrees or passive in nature. Asset allocation strategies listed should be used only as general guidelines on how investors may use asset allocation as a part of their core strategies.

• Constant-Weighting Asset Allocation
• Strategic Asset Allocation
• Tactical Asset Allocation
• Dynamic Asset Allocation
• Insured Asset Allocation
• Integrated Asset Allocation

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Fed Announces Open-Ended Bond Purchases – QE3

The Federal Reserve on Thursday announced that it is launching a new Quantitative Easing 3 (QE3) program, saying it will buy $40 billion of agency mortgage-backed securities each month as long as the economy needs it, starting Friday.

It’s also keeping in place so-called Operation Twist, which consists of swapping short-dated securities for longer-term securities, as well as reinvesting the proceeds of maturing securities, so the central bank will be adding $85 billion of long-term securities each month through the end of the year.

The Fed is also extending its plan to keep interest rates exceptionally low until at least through mid-2015. Fed funds rates are currently targeted at a rate between 0% and 0.25%.

 

Hong Kong Regulator Took Ernst & Young To Court

Hong Kong’s securities regulator has taken Ernst & Young to court after the audit firm failed to turn over accounting records related to a company based in mainland China.

The auditor now faces the dilemma of complying with the order from the regulator and risking a possible breach of mainland China’s state secrecy laws, or facing sanctions in Hong Kong.

The case is the first of its kind in Hong Kong, and it mirrors one in the United States in which Ernst & Young’s rival, Deloitte Touche Tohmatsu, is fighting a request from U.S. regulators to hand over work papers from its audit of the Chinese computer company Longtop Financial Technologies.

The Securities and Futures Commission wants Ernst & Young Hong Kong to hand over records from its audit work for the water provider Standard Water.

The regulator said Monday that the audit firm had claimed it did not have the relevant records, as they were being held in mainland China by its joint-venture partner, Ernst & Young Hua Ming, and could not be produced due to restrictions under the mainland’s state secrecy laws.