Investors make their greatest mistakes in this area. Individuals are “mentally wired” to invest in what has performed well recently (“trend following”). The standard cure is a “set it and forget it” strategy—never deviate from a standard asset allocation.
But static portfolio allocation creates periods of high risk for client portfolios. Freestate adjusts portfolio allocations based on market conditions so that clients do not exceed targeted risk levels. This significantly improves long-term portfolio risk/return performance.
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