Secular Asset Trends
MyPlanIQ advocates a hybrid approach in portfolio construction. It is our view that one should adopt a core-satellite structure in the overall asset allocation. We have discussed this approach in several newsletters such as July 15, 2013: Portfolio of Portfolios & Core Satellite Portfolios. You can find more discussion on this topic in our Newsletter Collection.
The core satellite approach is to invest in both a core Strategic Asset Allocation (SAA) portfolio and a satellite Tactical Asset Allocation(TAA) portfolio. The approach is based on our belief that both strategies are sound long term investing strategies. Furthermore, they complement with each other in different market cycles such as bear market and bull market.
In a strategic portfolio, asset allocation is based on long term secular outlook of major asset classes and their correlation, in addition to personal risk profile. By long term or secular we mean 10 years or even longer (preferably twenty years or longer). Thus, asset allocation is rarely changed. It will be changed only when there is a secular asset trend shift.
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