Portfolios 'must place risk over asset allocation'

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Merrill Lynch has tipped its hat at the concept of holistic financial planning by adopting a portfolio strategy for investors incorporating all of their assets.

Initial details of a global strategy paper published by Merrill Lynch Global Private Client suggest while the concept of Modern Portfolio Theory created five decades ago was designed to set out the asset allocation requirements of the investment market and ensure investors are sufficiently diversified against market volatility. However, the principles behind this theory no longer reflect of the needs of individual investors or “take into account bubbles and crashes” suggests the investment house, so the concepts of personal risk and aspirational risk need to be acknowledged. While this ap...

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