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Asset Class Adjustments

Asset Class Adjustments

Some asset classes tend to be more volatile than others. By lowering your exposure to these asset classes, you can theoretically lower your overall risk. In the example below, US Mid/Small-Caps and International Stocks are reduced in favor of more US “Blue Chip” exposure, Precious Metals are increased, and High Yield and Global Bonds are lowered in favor of more US Investment Grade Core Bonds and Cash/CDs.

  Core 60 Defensive 60
Stocks: 60%    
US Large Growth 10.5% 8%
US Large Blend 10.5% 15%
US Large Value 10.5% 15%
US Mid/Small Growth 3.5% 2%
US Mid/Small Blend 3.5% 4%
US Mid/Small Value 3.5% 2%
Real Assets 6% 6%
International Core Equity 9% 7%
Emerging Markets 3% 1%
Alternatives: 3.5%    
Hybrids 2% 1%
Precious Metals 1.5% 3.5%
Bonds: 36.5%    
US Investment Grade Core 25% 26%
Global/International 4% 2%
Inflation Protection 4% 4%
High Yield 2.5% 1%
Cash/CDs 1% 2.5%

The allocation is still diversified and well-balanced, but it’s positioned more defensively. The adjustments can be made portfolio-wide, as in the example above, or simply within a few asset classes.