Steve Blumenthal, CEO of CMG Capital Management Group, spoke to Gregg Greenberg at theStreet about why the old 60/40 asset allocation model isn’t a good bet in today’s environment.
We are in an investment environment that offers historically low traditional investment returns. Today, the projected return on the traditional 60/40 model is the lowest in 140 years at 4.26% (excluding management fees), according to Research Affiliates, LLC.
Instead, Blumenthal and CMG favor a tactically managed 33/33/34 strategy that combines many non correlating risk diversifiers to smooth the return stream for investors by managing risk while enhancing returns.
Blumenthal favors 33/33/34 as a better definition of a balanced portfolio today. Enhanced Modern Portfolio Theory didn’t fail the last 12 years; the failure occurred in the construction process. The risks were too concentrated because the solutions were unavailable to most investors. Today the solutions exist for all investors, and advisors.
See the full segment with Steve Blumenthal on theStreet: Here’s Why Your Old Asset Allocation Isn’t Working.