Asset Allocation and Model Management

Asset Allocation is a buzzword in our industry. The real goal of asset allocation is to ensure you are invested according to your risk level and income needs without being too exposed in any one area, sector, or holding. There are various ways to achieve proper asset allocation, but over the past decade, it has become more common to achieve this through investment portfolios that are actively managed by an advisor. We have developed a stringent, in-house process to create investment models to achieve an asset allocation mix that is specific to your situation and can evolve with the ever-changing economic climate.

Model Management Process

Valley Wealth Group sets itself apart from many firms with our custom models. Each model is created based on risk tolerance: conservative, moderate conservative, moderate, moderate growth, and growth.

  • We start with 30 asset categories and run them through our proprietary screening process to identify the investments that meet our pre-determined requirements.
  • Three times per year, our firm meets internally to review the prior time period, assess any needs to replace or remove investments from each model, and develop the models to be implemented for the upcoming time period.
  • During this process, we review the outcomes, market conditions, and meet with industry partners.
  • Once the models have been revised, each of our advisors will rebalance client portfolios based on each client’s personal investment goals.

Asset Allocation

Asset allocation, which is driven by complex mathematical models, should not be confused with the much simpler concept of diversification.

Asset allocation is the process of selecting a mix of asset classes that mirrors an investor’s financial profile in terms of their investment preferences and tolerance for risk. Different asset classes may have varying cycles of performance. The idea of investing in multiple asset classes is to minimize the risk and volatility that comes with adverse movements in any one asset class. 

All investments involve some sort of risk, whether it’s market risk, interest risk, inflation risk, or liquidity risk. An individualized asset allocation strategy seeks to mitigate risk and volatility associated with any one asset class. 

Asset allocation does not ensure a profit or protect against a loss. 

Individualized, Evolving Strategy

When done properly, the allocation of assets creates a strategy which will reflect the investor’s desired goals, priorities, investment preferences and tolerance for risk. Each strategy is built on the careful consideration of the key elements of the individual’s preferences and must include periodic reviews and revisions. Financial markets change as will your financial situation. As you move through life’s stages your needs, priorities and tolerance for risk may change, so too, must your asset allocation strategy.  

Let’s review your portfolio to identify opportunities to improve.

Diversification and Asset Allocation do not guarantee positive results. Loss, including loss of principal, may result.