Combining Stocks, Bonds & Liquid Alternatives in a Diversified, Tactical Portfolio
The Total Portfolio Solution whitepaper examines CMG’s Enhanced Modern Portfolio Theory (EMPT), which helps avoid the pitfalls of emotional decision-making in portfolio construction.
The paper builds on traditional MPT in two ways – it adds liquid alternative investments as a third asset class to stocks and bonds. And it employs “strategic tilts” that increase equity exposure when stocks are attractively priced, and decrease equity exposure when they’re expensively priced.
The Total Portfolio Solution applies CMG’s EMPT to respond proactively to market movements – allocating capital to rising asset classes, avoiding falling ones. Enhanced MPT says it’s possible to construct portfolios offering the maximum possible expected return for a given level of risk. This approach is actively practiced by large pension investors, college endowments and the ultra-wealthy.
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