A. Diversification is not a very well understood concept. Most investors think their portfolios are diversified if they own 100 different stocks. Actually, owning 100 different stocks does not reduce the systematic risk of a portfolio any more than owning 20 stocks across industry lines. True diversification can be achieved if you own two or more assets which have a negative or nearly negative correlation to each other. Asset allocation techniques measure the relationship between investments in order to construct a more balanced or diversified portfolio.
Asset allocation is a valid and useful concept.
A. Asset allocation techniques are currently in use by most banks, insurance companies, financial planners, investment advisors, and institutional investors. Ermilio Consulting Ltd. takes a very objective and analytical approach to designing and managing our client's portfolios. We work closely with clients to identify their needs, set goals, select appropriate investments, and monitor performance. Ermilio Consulting Ltd. welcomes the opportunity to answer your questions. Please e-mail us if you have any comments or questions in response to what you've read in this section.