How should investors allocate their assets over time? Does it make sense to take a fixed and strategic approach, or is it better for allocations to be actively managed?

Investors often struggle with these questions, but we believe a dynamic approach is the best way to capitalize on changing investment opportunities over time. But how should one dynamically manage these assets?

Creating asset allocations based on whether assets are cheap or expensive may tell us how a portfolio will perform over the next 7 to 10 years. But it won’t tell us much about how it will perform in the next three years and even less so over the next three months. To better manage assets in the short to medium term, we incorporate forward-looking macroeconomic analysis. We’ve developed a framework that can help investors allocate assets more effectively through the various stages of the business cycle, or what we refer to as macro regimes, which unfold over shorter timeframes.

In the next section, read about why valuation is a limited predictor of returns, or download our full paper on dynamic asset allocation.

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