How to improve your asset allocation

Skilled asset allocation requires more than a touching faith in ever rising equities. It needs constant attention and a willingness to readily move with the markets.

Over the past couple of weeks, two interesting items have struck us. The first was from Barclays Capital Equity Gilt Study 2006. This is an annual investment document that just about everybody in the industry reads. It contains important data and key insights. Reference is made to fund management processes, making the point that current relative asset valuations and fashionable investment practices continue to be dominated by the poor asset allocation decisions made during the 1990s.

This was the view of Tim Bond, one of the Equity Gilt Study authors. He points out that two of the cardinal rules of investment practice were broken; he said the cult of the equity remained dominant and an apparent belief in the abrogation of the law of gravity.

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