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Asset Allocation

Diversification is more effective when it is across asset classes such as bonds, cash, property and commodities, and not just across equities. The idea is to have low correlation between asset classes, so if equities do badly, commodities may do well. The most groundbreaking theory of asset allocation is known as Modern Portfolio Theory, which was published in 1952 in the Journal of Finance. Harry Markowitz, the author of the theory, developed the concept of the Efficient Frontier, which is the set of asset distributions that gives the highest returns for any given risk.

If you have the appetite to find out more, visit the online investment library of Seven Investment Management at www.7im.co.uk, where you will find free access to informative and easy-to-read articles about the importance of asset allocation in portfolio construction.

 
Investment Opportunities
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