Macroeconomic uncertainty: Dynamic allocation is vital

It is well known that diversification reduces portfolio risk and improves investment outcomes. By combining different assets that have a low or negative correlation to one another, the end result is worth more than the sum of its parts; that is, the overall volatility profile is reduced without necessarily sacrificing returns. Static portfolios remain unchanged in terms of their asset allocation, as one finds in a traditional 60/40 portfolio holding stocks and bonds. This works well during certain macroeconomic environments, but not others. Evolving macroeconomic conditions and uncertain...