Sometimes called "tactical asset allocation" or "dynamic allocation," a multi-asset approach blends stocks and investments such as bonds, commodities, real estate and cash, shifting the mix as the market changes. If you seek consistent returns in both turbulent and calm markets, multi-asset strategies are designed to help you:
- Capture upside investment opportunity
- Attempt to minimize downside losses
- Stay responsive to market movements
Reducing Portfolio Volatility
City National Bank works with a variety of managers that offer specialized strategies using multiple asset classes. When properly combined, alternative assets can help reduce the overall volatility in your portfolio by providing exposure to niche investment areas, where returns generally do not move with market movements.
Tactical allocation strategies can make smaller shifts more often, helping to achieve steady returns. Instead of reacting to big drops in the market, tactical managers have the ability to sidestep them. They shift out of certain investments or sectors quickly and steer the portfolio to more promising opportunities or defensive postures.
Are Multi-Asset Strategies and Dynamic Allocations Right for You?
Note that multi-asset strategies may not be appropriate if you don't want exposure to commodities, real estate or international investments. Nor will dynamic allocations work for you if you are intent on avoiding capital gains taxes as a result of asset sales.
Dynamic allocation strategies are rarely an all-or-nothing proposition and you may want to earmark only a portion of your overall portfolio to this type of strategy. But if you are looking to broaden your investment opportunities while curtailing risk, a multi-asset strategy can help.
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