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Strategy

Portfolio Diversification

Two major components of the Robinswood Financial investment approach are diversification and asset allocation.

Diversification mixes a wide variety of investments within a portfolio. A portfolio containing different kinds of investments will, on average, yield higher returns and pose a lower risk than any
Your strategy of diversification and asset allocation will deliver you the lionís share of investment returns.
individual investment found within the portfolio.

Asset allocation determines the percentage in which you invest in each of the different types of securities. The mix of investments and the percentages invested in each are based on your risk tolerance, financial goals, and time horizon.

Your strategy of diversification and asset allocation will deliver you the lionís share of investment returns.

Diversification


The maxim "Donít put all your eggs in one basket" is the concept behind diversification. A diversified portfolio is one that includes securities from a broad selection of different asset classes, each of which behaves differently during the same economic trends. That is, when one type of security does poorly,
The maxim "Donít put all your eggs in one basket" is the concept behind diversification.
another type is likely to do well. Therefore, together in a portfolio, the effects of up-and-down swings are reduced without sacrificing good returns. Having many types of securities in your portfolio ensures that you limit your risk while putting you on the path toward realizing your goals.

To implement a well-diversified portfolio, Robinswood Financial includes the asset classes of U.S. equity (stock) funds, international equity funds, and bond funds. Read more about the specific fund categories used within each of these asset classes.

Asset Allocation


After you and your Robinswood Financial advisor decide on the best mix of asset classes, you determine how much of your total investment will go toward each asset class. This becomes your asset allocation.

The percentages representing your asset allocation are based largely on your risk tolerance, although the amount of time you have to achieve your financial goals and the level of return you want also play a role. This information comes out as part of your consultation process with your financial advisor.

If you have a high tolerance for risk, for example, you might have a greater percentage invested in equity (stock) markets, in which you could stand to make a lot of money but you could also lose a lot. On the other hand, if you have a low tolerance for risk, you might have a greater percentage invested in bonds, which tend to grow at a slower rate than stocks but also tend to preserve the wealth you have.

Asset Classes and Fund Categories
An asset class is a group of securities that have similar characteristics, behave similarly under certain market conditions, are bound by the same laws and regulations, and reflect different risks and returns. The three main asset classes used by Robinswood Financial are domestic equities (stocks), international equities, and fixed-income (bonds).
Mutual funds within an asset class can be further subdivided into fund categories. Fund categories provide a way of differentiating mutual funds by their features, content, and objectives, as well as their characteristics for risk and return. Having representation from different fund categories allows for further diversification.

Depending on your risk tolerance, financial goals, and time horizon, your Robinswood Financial advisor shapes your portfolio to consist of a mix of securities from the following fund categories:

U.S. Funds
  • U.S. large-cap growth
  • U.S. large-cap value
  • U.S. mid-cap growth
  • U.S. mid-cap value
  • U.S. small-cap growth
  • U.S. small-cap value
  • U.S. real estate
International Funds
  • International large-cap growth
  • International large-cap value
  • International mid-cap growth
  • International mid-cap value
  • International small-cap growth
  • International small-cap value
  • Emerging markets
Bond Funds
  • Global high-grade bond funds
  • Global high-yield bond funds
  • Global short-term bond funds
  • Global intermediate-term bond funds
  • Government National Mortgage Association (GNMA, or "Ginnie Mae") funds
  • Emerging market debt


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