Webinars & Audio Insights | July 11, 2023
Investors: Use Capital Market Assumptions to Help You Make Strategic Asset Allocation Decisions
By John Marco & John Ross
At Segal Marco Advisors, we aim to help our clients make informed and actionable decisions about strategic asset allocation over time — decisions that are consistent with their long-term objectives and goals.
To that end, we establish forward-looking capital market assumptions (CMAs) that we use to model asset allocation options over a 10- and 20-year horizon. Our CMAs consider the macroeconomic drivers, like inflation and interest rates, that are currently so challenging for investors.
Well-crafted CMAs will give investors actionable intelligence on how to reevaluate risk.
Recently, we covered this important topic at our 2023 client summit.
Get the details about our CMAs
Watch the recording from the summit here:
You’ll learn:
- Elements of this equation on which our methodology is based: Risk-Free Rate + Risk Premium = Asset Class Total Return
- Our methodology, which we refer to as a triangulation approach because it includes the three proprietary models illustrated below that are designed to check and balance each other
- The value of factoring correlation among asset classes into the methodology
- How our capital asset pricing model reverse optimization differs from a traditional optimization model (that uses risk, return and correlations for asset classes and establishes an efficient frontier) by starting with optimal asset allocation weights based on what the market is telling us, and working backwards
- The value of our model’s outputs when comparing portfolio risk on a relative basis
- Why it’s important when evaluating asset classes to view risk as range of potential outcomes, not just a potential downside
Any questions?
Get in TouchMore recorded insights featuring Segal Marco subject matter experts are coming soon
This is the first recorded insight in a series we’re calling SMART, which stands for Segal Marco Advisors Research & Trends.
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The information and opinions herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This article and the data and analysis herein is intended for general education only and not as investment advice. It is not intended for use as a basis for investment decisions, nor should it be construed as advice designed to meet the needs of any particular investor. On all matters involving legal interpretations and regulatory issues, investors should consult legal counsel.
