Growth Allocation

Growth Allocatioin


Growth assets are those assets that offer exposure to traditional financial equity and equity-like markets. One efficient way to gain this growth market exposure is through the use of low-cost exchange traded funds or index-funds that invest in the indexes we seek to emulate. The allocation to Growth assets will be within the range of 20% to 80% of the total.

Within that Growth allocation, a portion is allocated to to equity assets (stocks) and a portion is allocated to real assets (real estate, commodities and natural resources). When situations warrant, a portion of the equity-like portfolio may be allocated to "complimentary strategies" - strategies that attempt to offer equity-like returns using different techniques than simply holding long positions in equities.

Allocation to equity market exposure — common stocks — will be within the range of 10% to 90% of the Growth portion of the portfolio. Within that stock portion, we will allocate to both domestic and foreign stocks. Depending on the size of the individual portfolio, the equity portions of the portfolio may include small capitalization stocks as well as stocks from emerging economies.

Exposure to real assets may also be gained through low-cost exchange traded funds or index funds and should be between 5% and 50% of the Growth portion. We see two basic components of real assets: real estate and commodities/natural resources. Commodities include things such as crude and heating oil, aluminum, gold, wheat and corn. Natural resources include things such as oil and gas, metals and mining, energy equipment and services, containers and packaging, paper and forest products, construction materials and others.

We will determine the allocation to stocks, real estate or commodities according to what we see, hear, read and think about the contemporaneous condition of those markets. We will over and under weight those categories as we see the opportunities either present themselves or subside.

You have learned a little bit about the Growth portion, but that is only one part of your total portfolio. Now we must add some Moderation to that unconstrained Growth potential. 

Macro Allocation Choices ⇔ The Moderation Portion