What are the best index funds to invest in?
What is passive management?
What is the active management?
What is asset allocation?
Which asset classes should I include in my portfolio?
What is the difference between index fund investing and asset class investing?
These are common questions investors are asking themselves today. While many have heard of index funds and asset classes, many don’t understand what asset class investing is and what the differences are between traditional index funds and asset class funds.
What is Asset Class Investing?
Asset Class Investing is a passive investment approach that draws on the research of some of the academic community’s most innovative and respected thinkers and economists. As its name suggests, rather than trying to pick stocks or industry sectors, asset class investing focuses on asset classes — which are simply any group of securities (such as U.S. Large Companies and Emerging Markets) that exhibit similar risk and return investment characteristics and perform similarly in any given market environment.
Since asset allocation has a great impact on investment returns, asset class investing carefully controls the investments included in each Asset Class, giving investors truer market returns than similar strategies. While a number of investment vehicles can be employed to implement Asset Class Investing, using institutional mutual funds specifically designed for their asset class characteristics can greatly simplify the process.
Putting Asset Class Investing to Work For You
While it is easy to get caught up in the state of the economy or the latest “hot” stock, we believe passionately that the way you invest should be aligned with where you are in your life…not with the short-term ups and downs of markets.
You should have a financial plan to help you manage your opportunities, needs, concerns and goals.
We call this approach Asset Class Investing and believe it makes good sense as you plan for both today and tomorrow.
There are three things to remember about how Asset Class Investing can work for you and your family:
- It focuses your investment portfolio on meeting your life goals. It is an approach designed to help you manage towards your most important goals rather than to short-term market trends.
- It is based on science and academic research. It combines the latest discoveries in economics and investing with more than 80 years of market data and insights as well as in-depth studies of investor psychology and behavior.
- It is a disciplined and structured approach. It helps protect against the common behavioral mistakes that can compromise your long-term financial goals.
To view the complete Wealth Guide titled: Putting Asset Class Investing To Work For You, click here.