Global Asset Allocation: A Survey of the World’s Top Asset Allocation Strategies

The reason many people will invest in both stocks and bonds is that they are often non-correlated, meaning, stocks often zig while bonds zag.

Ultimately, smart investing requires that we not only monitor asset allocation, but of equal weight, we focus on the advisory fees associated with the investment strategy.

How much of your global stock allocation should be in the United States?

This is one of the problems with investing in just one security, country, or asset class.

Currently, your ten-year nominal return for buying U.S. government bonds will be around 2.25% if held to maturity.

So what is an investor to do? The next step lies in what is called the only free lunch in investing – diversification.

The most venerable asset allocation model is the traditional 60/40 portfolio. The portfolio simply invests 60% in stocks (S&P 500) and 40% in 10-year U.S. government bonds.

A 68-year long stock underperformance is almost the same as a human’s current expected lifespan in the U.S.

The Sharpe ratio is a measure of risk adjusted returns, and is calculated as: (returns – risk free rate)/volatility.