When it comes to investing and portfolio management, diverse opinions, strategies, and approaches abound, and, for the most part, there is not one “right” path to financial success. That said, many investors are hesitant to stray from the time-tested “60/40” model of portfolio management. This model dictates that investors should allocate 60% of their portfolio to equities and the remaining 40% to bonds and other fixed income investments.
However, markets have changed drastically since this model was first explored in the 1940s, and many investors worry that by sticking to the 60/40 model, they may not be taking advantage of the potential plethora of growth opportunities out there.
The answer? Peruse other portfolio strategies. In addition to the traditional 60/40 model, there are a range of other options that investors should consider. For example, the ‘DP Trading Room’ approach emphasizes the importance of diversification in portfolios with multiple asset classes, markets, strategies, and product types, enabling investors to optimize their risk-adjusted return potential.
The DP Trading Room’s ‘Alternate Efficient Frontier’ is an analysis which allows investors to determine if their portfolio is, in fact, well-positioned given their risk profile. Utilizing this analysis, investors have the unique opportunity to optimize their portfolios in a manner that surpasses the standard 60/40 model.
Investors looking to further optimize their portfolios should also consider thematic investing. This approach capitalizes on major global trends, such as the growth of 5G technology, the proliferation of new renewable energy sources, and the unparalleled development of the digital entertainment industry. Through thematic investing, investors have access to a plethora of stocks from the cutting edge sectors of the global economy, all in one portfolio.
The bottom line? The 60/40 model may be a perfectly fine way for some investors to preserve capital and generate income, but there are a range of different strategies and approaches that investors should consider to ensure that their portfolios are well-positioned for the changing markets. With new strategies, creative approaches, and the ability to diversify across multiple asset classes, markets, and strategies, the DP Trading Room provides investors with the tools to optimize their portfolios.
By exploring the range of strategies outside of the traditional 60/40 model, investors are far more likely to achieve their investment goals and long-term financial success.