Dynamic Asset Allocation
When driving on ice, you slow down to avoid a crash. But, it’d be foolish to keep driving at a crawl when the road in front of you thaws. With the proper mindset and equipment, you can speed up at times to take advantage of smooth roads in front of you.
Similarly, rather than a binary risk-on and risk-off approach, Blueprint looks to reallocate dollars to similar, stronger positions instead of heading to cash at the first sign of a downtrend.
This important distinction allows us to preserve capital during bear markets and participate in bull markets faster and longer than many other tactical managers. We accomplish this by following the Blueprint Quality Curve:
For example, starting at the bottom left, we consider Emerging Market Equities to be the riskiest, but highest expected return piece of the portfolio. If in a downtrend we look at the trends in Foreign Developed and then U.S. Equities as possible locations for those dollars before looking to the fixed income side of the portfolio — let alone cash.
On the bond side, we start with international, inflation-protected and higher duration instruments before allocating additional weight to safer, short duration bonds.
Please reach out for further information about Blueprint’s approach to risk management.
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