Strategy Plus Asset Allocation

Offered exclusively to Capital Securities clients, our Strategy Plus program helps you and your Financial Consultant develop the appropriate blend of asset classes for your overall investment strategy.

The Case for Asset Allocation
With decades of market activity to analyze and hundreds of studies to review, we now know the most important factor that affects investment performance isn’t the ability to time the market, anticipate global economic changes, or forecast investor psychology. In fact, more than 90% of a portfolio’s performance depends on a process known as asset allocation—the science of combining the right categories of investments.

The concept was originally developed by Nobel laureate Professor Harry Markowitz of the University of Chicago. Large pension-fund managers and other institutional investors have benefited from this approach for years. Now individual investors are taking advantage of this methodology as well.

What Drives a Portfolio?

• 4.6% Security Selection
• 2.1% Market Timing
• 1.8% Other Factors
• 91.5% Asset Allocation

Source: Brinson, Singer, and Beebower, "Determinants of Portfolio Performance II: An Update," Financial Analyst Journal, May-June 1991.

Diversification Is the Key
Strategic asset allocation begins with diversification—making sure you don’t put all your money into one type of investment. Regardless of the percentages, a strategically diversified portfolio often includes a mix of:

• equity investments including domestic and international stocks and stock mutual funds;
• fixed-income securities such as corporate, government, or municipal bonds; and
• other investments including CDs and money markets.

These categories of investments are also known as asset classes.

Investments Working Together
Different asset classes react differently to the same changes in the world’s economy. The right mix is critical because it doesn’t matter as much how one particular investment performs, but how all of your investments perform together.

Diversifying your investments may reduce your portfolio’s volatility. Of course, no strategy can guarantee against losses in every conceivable investment situation.

When you take a strategic approach to investing, by diversifying your portfolio and taking advantage of asset allocation, you arm yourself with the tools of successful investors.

In Summary
When you work with an Capital Securities Services, Inc. Financial Consultant, your Strategic Allocation Review may include:

• a recommended asset mix for your investments;
• a comparison of your existing portfolio to the new portfolio proposed for you; and
• information on the potential returns and volatility of your existing and proposed portfolios.

If you are interested in taking advantage of our Strategy Plus investment process, talk with a Financial Consultant at the Capital Securities office.

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