In investing, what specifically do we mean by the term 'asset' and how does it differ from stock market 'sectors'? And what is the distinction between a 'static' and a 'dynamic' asset allocation model such as Asset Rotation?
Assets or 'asset classes' as they are sometimes also known by, are essentially the various sorts of entities that can be acquired or 'invested' in. I would include things like the following as legitmate broad asset classes that can be additional broken down into their constituent elements:
Equities
Commodities
Fixed earnings Treasuries
Inflation protected Treasuries
Corporate bonds
Currencies
Precious metals
Property and so on.
The various sectors show unique degrees of strength as the market develops by way of the economic and stock marketplace cycles and is an incredibly helpful tool to obtain insights into the belly of our beast, the stock market place.
As you can see, Asset Classes or 'Assets' are broader than the traditional range of stock market sectors and potentially offer much greater diversification options to the investor.
The way investment funds are split amongst Asset Classes is recognized as 'Asset Allocation'. So you may well for instance have 20% in Equities, 40% in Fixed Revenue Treasuries etc. etc. as your selected asset allocation tactic. Some asset allocation investment models are 'static' in the way such funds are invested like the typical Endowment Fund, just seeking to minimise risks whilst achieving long run but usually unexciting returns. Others might possibly dynamically advise altering individual investor asset allocations according to age - maybe to decrease risk up to retirement and prior to the purchase of a pension annuity.
Yet another dynamic asset allocation model is the sort deployed by our Asset Rotation technique. The broader range and extra diversification provided indicates the chances of outperforming the S&P500 are incredibly significantly boosted as the model is able to pick from a range of diversified assets to take benefit of their differential strength at various points of the Bull/Bear stock market place cycle.
With the advent of ETF's it is now much less difficult and much more feasible for the retail investor to invest in the varied sector and asset classes, as they are listed on stock markets like individual shares and can be traded utilizing an ordinary broker.
Particular ETF's have their drawbacks and there exist several that just scam the individual investor. 1 requirements to appear carefully at what risks are getting taken when investing in these tools by reading the respective prospectus and looking at key metrics to gauge the size and liquidity of the ETF. Of course, even then, right after going by means of such due dilligence it will by no means be doable to 100% guarantee absolutely nothing will go incorrect - just as could happen in any mutual fund. In selecting the tightly focused list of alternative Asset Class ETF's we have carried out our utmost to reduce this distinct risk for subscribers.
