• Mixing different stocks and bonds results in their standard deviation and expected return

• Mixing different stocks and bonds results in their standard deviation and expected return

• Most allocations are NOT efficient – take on more risk than return

• Mixing different stocks and bonds results in their standard deviation and expected return

• Most allocations are NOT efficient – take on more risk than return

• Goal is to get the mix correct to maximize return given a level of risk

• These views are those of Larry Frank and should not be construed as investment advice. Opinions expressed are subject to change without notice and are not intended to predict future performance.

• Investors can not invest directly in an index. Therefore, passive indexed approaches have been developed. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.

• There can be no assurance that the financial concepts and strategies presented in this material will be successful. Investments are subject to market fluctuation, risk, and loss of principal. Past performance is not a guarantee of future success.

• Asset allocation, which is driven by complex mathematical models, should not be confused with the much simpler concept of diversification. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. Diversification neither assures a profit nor guarantees against loss in a declining market.

• It is important to remember that the objective for diversification is to combine the asset classes into a long term portfolio. Recall from the “skittles chart” you’ve seen in the past, that each one of these asset classes changes position relative to the others over time. The combination of them provides a smoothing effect from the weighted average. The purpose of the chart is not to try to pick a “winning” asset class at any given moment in time.

• The value of bonds decline as interest rates rise, and vice versa.

• International investing: Additional risks are associated with international investing, such as currency fluctuations, political and economic stability, and differences in accounting standards.

Disclosures