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Asset Allocation

 

Understanding Your True Asset Mix

Over the past 20 years, asset allocation has increasingly become the foundation of individual as well as institutional investment portfolios. Yet, while many people are familiar with the concept, not all fully understand what it means to them and their investments.
 

Asset allocation entails exchanging the potential to reap a higher return – and the risk of taking an equally dramatic loss – for the likelihood of generating a more consistent, positive return over the long term.
 

The general idea is that instead of devoting the bulk of your assets to a particular sector or even one specific investment, you choose different types of investments. Underlying this decision is the assumption that each asset class will react somewhat differently to a given event. For example, if interest rates rise, some asset classes should, as a whole, increase in value. Conversely, the value of some of your investments will tend to decline in the same environment – but should flourish when rates drop.

 

Basic Asset Classes

Depending on your appetite for risk, the economic environment, your specific investment objectives and other factors, your portfolio might include some or all of the following:

  • Cash and cash alternatives

  • U.S. equities

  • Non-U.S. equities

  • Fixed income

  • Real estate

  • Alternative investments
     

​​​​​​​​​​​​​​​​​​If you’re primarily interested in securing a

regular income, your portfolio may be

heavily weighted toward dividend-paying

stocks. If you’re more focused on long-term

appreciation, some balance of equities and

other growth-oriented investments may

form the core of your portfolio.

 

Diving Deeper

While the overall concept of asset allocation

is fairly straightforward, determining

precisely how your assets are allocated is

typically more complicated. That’s because

most portfolios include some sort of

packaged investment products that are

themselves divided among asset categories.

For example, while some mutual funds may

fundamentally represent a single asset class 

(e.g., stocks), many others combine several

types of securities. In addition, mutual fund

managers must also typically allocate some of their funds’ holdings to cash or cash equivalent investments to meet daily redemptions from shareholders and pay the expenses of operating and managing the funds.
 

To truly understand your overall portfolio allocation, you and your advisor must not only look at individual asset classes, but assess the components of the specific securities you own. That involves breaking packaged investments down to their individual holdings, or “x-raying” and assessing each to see what’s inside, as shown in the graphic above.


Finding the Right Mix

Your advisor can help you understand your portfolio’s true allocation by examining all of your assets and the vehicles in which they are held. Combining that knowledge with an understanding of your investment objectives and risk tolerance, we can then make recommendations to ensure your portfolio stays in line with your investing goals.
 

While prudent asset allocation of portfolio holdings cannot fully protect investors, economic conditions historically tend to affect dissimilar markets in different ways. And as a consequence, understanding asset allocation – and ensuring an appropriate mix of assets within your personal portfolio – is a solid strategy for balancing the risks of investing with the potential rewards.
 

Asset allocation does not ensure a profit or protect against a loss. Investing involves risk and investors may incur a profit or a loss. There is an inverse relationship between interest rate movements and fixed income prices. Generally, when interest rates rise, fixed income prices fall and when interest rates fall, fixed income prices rise. International investing involves special risks, including currency fluctuations, different financial accounting standards, and possible political and economic volatility. Declines in the value of real estate, economic conditions, property taxes, tax laws and interest rates all present potential risks to real estate investments. Alternative investments involve specific risks that may be greater than those associated with traditional investments and may be offered only to clients who meet specific suitability requirements, including minimum-net-worth tests.
 

This information is not a complete summary or statement of all available data necessary for making an investment decision. Investing involves risk and investors may incur a profit or a loss. You should discuss any tax matters with the appropriate professional.

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© 2019

Aspen Grove
Asset Management

Important Disclaimers

AGP Franklin, LLC ("AGP Franklin") is a Registered Investment Advisor ("RIA"), located in the State of Tennessee. AGP Franklin provides investment advisory and related services for clients nationally. AGP Franklin will maintain all applicable registration and licenses as required by the various states in which AGP Franklin conducts business, as applicable. AGP Franklin renders individualized responses to persons in a particular state only after complying with all regulatory requirements, or pursuant to an applicable state exemption or exclusion.

 

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Please read these terms and conditions of use (“Terms”) carefully before using the website located at https://www.aspengroveassetmanagement.com/ https://www.strongtowerwealthmanagement.com/ (“Website”) or any of the information or services provided by AGP Franklin, LLC (collectively “AGP Franklin”, “we”, “our”, “us”) in connection with the Website. By using the Website, you acknowledge that you have read and understood these Terms and accept to be legally bound by them. If you do not accept and agree to these Terms, you are not an authorized user of the Website or any of the information or services provided by AGP Franklin in connection with the Website and should promptly terminate all use thereof. The terms “you” and “your” mean you and any entity you may represent in connection with the use of the Website. You may use your browser to download or print a copy of these Terms for your records.

 

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These Terms were last updated on January 21,2025.

 

Risk Disclosure

Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable.

 

Asset allocation may be used in an effort to manage risk and enhance returns. It does not, however, guarantee a profit or protect against loss. Performance of the asset allocation strategies depends on the underlying investments.

 

This website is intended to provide general information about AGP Franklin and its services. It is not intended to offer or deliver investment advice in any way. Information regarding investment services are provided solely to gain an understanding of our investment philosophy, our strategies and to be able to contact us for further information.

 

Market data, articles and other content on this website are based on generally available information and are believed to be reliable. AGP Franklin does not guarantee the accuracy of the information contained in this website. The information is of a general nature and should not be construed as investment advice.

 

Please remember that it remains your responsibility to advise AGP Franklin, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.

 

AGP Franklin will provide all prospective clients with a copy of our current Form ADV, Part 2A ("Disclosure Brochure"), Form ADV Part 2B, which is the Brochure Supplement for each advisory person supporting a particular client, and the Form ADV Part 3 (Client Relationship Summary or Form CRS). You may obtain a copy of these disclosures on the SEC website at http://adviserinfo.sec.gov or you may Contact Us at (615) 778-9842 to request a free copy via .pdf or hardcopy.
 

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