Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Asset Allocation Basics Key Benefits of Asset Allocation How to Use Asset Allocation |  NOT FDIC INSURED  |  MAY LOSE VALU...
Asset Allocation: A Strategic Division of Assets Asset allocation basics Stocks Cash Equivalents Bonds
Diversify Further Within Stocks Asset allocation basics Style Growth and Value Small and mid-sized company stocks involve ...
Style:  Growth  and Value Asset allocation basics Investing involves risk. The information shown is for illustrative purpo...
Size:  Small, Mid and Large Asset allocation basics 15-Year Risk vs. Return (as of December 31, 2009) Source: PSN Enterpri...
Geography:  Domestic and Foreign Asset allocation basics Global Market Share Over Time 1970 2009 Source: Standard & Poor’s...
Sector: Technology, Energy and Healthcare Asset allocation basics Year First Second Third Top Three Sectors: Total Returns...
Diversify Further Within Bonds Asset allocation basics Fixed income securities are subject to the risks associated with de...
Diversify Further Within Bonds:  Sector & Credit Asset allocation basics Source: PSN Enterprise. For informational purpose...
Diversify Further Within Bonds:  Maturity Asset allocation basics Source: PSN Enterprise. For informational purposes only....
Three Major Benefits of Asset Allocation Key benefits of asset allocation 1 Gain exposure to rotating market leaders 2 Hel...
Gain Exposure to Rotating Market Leaders 1 Key benefits of asset allocation Year First Second Third Source: PSN Enterprise...
Help Reduce Exposure to Volatility 2 Key benefits of asset allocation Sources: BlackRock; PSN Enterprise. Past performance...
Potentially Increase Your Returns 3 Key benefits of asset allocation Return:  7.4% Risk:  3.5% Cash 24% Stocks 8% Bonds 68...
Asset Allocation Is Personal How to use asset allocation Aggressive Conservative Small-Cap Stocks Large-Cap Stocks High-Yi...
Asset Allocation Requires Tune Ups How to use asset allocation *Standard deviations are calculated using monthly returns. ...
Dollar Cost Averaging: Discipline  Rewarded How to use asset allocation Hypothetical example. Does not represent any parti...
Risks of Asset Allocation 1 General market risk (value of portfolios will fluctuate with market conditions) 2 Asset alloca...
Important Information The S&P 500 Index  is an unmanaged index that consists of the common stocks of 500 large capitalizat...
Important Information (cont’d) The Russell 1000 Value Index  is composed of those Russell 1000 securities with less-than-a...
Investing involves risk. This presentation is provided as an educational tool only. BlackRock is not engaged in rendering ...
You’ve finished this document.
Download and read it offline.
Upcoming SlideShare
Asset allocation ppt
Next
Upcoming SlideShare
Asset allocation ppt
Next
Download to read offline and view in fullscreen.

5

Share

Asset Allocation And Your Portfolio

Download to read offline

Asset Allocation And Your Portfolio

Related Books

Free with a 30 day trial from Scribd

See all

Related Audiobooks

Free with a 30 day trial from Scribd

See all

Asset Allocation And Your Portfolio

  1. 1. Asset Allocation Basics Key Benefits of Asset Allocation How to Use Asset Allocation | NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
  2. 2. Asset Allocation: A Strategic Division of Assets Asset allocation basics Stocks Cash Equivalents Bonds
  3. 3. Diversify Further Within Stocks Asset allocation basics Style Growth and Value Small and mid-sized company stocks involve greater risks than those customarily associated with larger companies. Foreign investment entails special risks. These risks are heightened in emerging markets. Emphasizing a particular industry sector involves greater risk than customarily associated with a more diversified portfolio. Size Small, Mid and Large Sector Technology, Energy and Healthcare Geography Domestic and Foreign
  4. 4. Style: Growth and Value Asset allocation basics Investing involves risk. The information shown is for illustrative purposes only. Higher Lower Growth Growth Growth Value Value Value Value Growth Price/ Earnings Ratio Price/ Book Ratio Expected Earnings Growth Rate Dividend Yield
  5. 5. Size: Small, Mid and Large Asset allocation basics 15-Year Risk vs. Return (as of December 31, 2009) Source: PSN Enterprise. Large Cap is represented by the S&P 500 Index. Mid Cap is represented by the S&P 400 Mid Cap Index. Small Cap is represented by the S&P 600 Small Cap Index. Past performance is no guarantee of future results. Returns assume reinvestment of all distributions. Risk is measured by standard deviation of quarterly returns. It is not possible to invest directly in an index. Return Risk Large Cap Mid Cap Small Cap
  6. 6. Geography: Domestic and Foreign Asset allocation basics Global Market Share Over Time 1970 2009 Source: Standard & Poor’s; Morgan Stanley Capital International. US companies represented by the S&P 500 Index. Non-US companies represented by the MSCI EAFE Index.
  7. 7. Sector: Technology, Energy and Healthcare Asset allocation basics Year First Second Third Top Three Sectors: Total Returns (2000-2009) Source: Standard & Poor’s, a division of The McGraw-Hill Companies; Lipper, Inc. Past performance does not guarantee or indicate future results. Investing involves risk. Standard & Poor’s offers sector indexes on the S&P 500 based upon the Global Industry Classification Standard (GICS), a standard that is jointly maintained by Standard & Poor’s and Morgan Stanley Capital International (MSCI). Each stock is classified according to sector, industry group, industry and sub-industry according to its largest source of revenue. For informational purposes only. This information does not represent the performance of any particular investment. The S&P 500 Index and the S&P sectors cannot be invested in directly. Utilities Materials Energy 2007 Utilities Healthcare Cons. Staples 2008 Cons. Disc. Materials Technology 2009 Financials Healthcare Utilities 2000 Utilities Energy Telecom 2006 Financials Utilities Energy 2005 Telecom Utilities Energy 2004 Cons. Disc. Materials Technology 2003 Energy Materials Cons. Staples 2002 Industrials Cons. Disc. Materials 2001
  8. 8. Diversify Further Within Bonds Asset allocation basics Fixed income securities are subject to the risks associated with debt securities including credit, price and interest rate risk. Bond values will decline as interest rates rise. Lower-rated bonds may contain more risk due to the increased possibility of default. US government bonds are guaranteed as to payment of principal and interest if held to maturity. Foreign investment entails special risks. Sector Corporate, Government and Mortgage Credit Quality High and Low Geography Domestic and Foreign Maturity Long, Intermediate and Short
  9. 9. Diversify Further Within Bonds: Sector & Credit Asset allocation basics Source: PSN Enterprise. For informational purposes only. Past performance does not guarantee or indicate future results. Investing involves risk. It is not possible to invest directly in an index. The information shown does not reflect any particular investment. Performance returns assume the reinvestment of all distributions. High Yield Bonds are represented by the Merrill Lynch US High Yield Master Index. Cash is represented by the Merrill Lynch US Treasury Bill 3 Month Index. US Treasuries are represented by the Merrill Lynch US Treasury Bill Master Index. Low Duration Bonds are represented by the Merrill Lynch 1-3 Year Corporate & Government Index. Investment Grade Bonds are represented by the Merrill Lynch US Domestic Master Index. Calendar Year Total Returns US Treasuries -3.7 % High Yield Bonds -26.2% High Yield Bonds 2.2% US Treasuries 3.1 % Low Duration Bonds 1.8 % Cash 0.2 % Cash 2.1 % Cash 5.0 % Low Duration Bonds 4.3 % Investment Grade Bonds 2.6 % Low Duration Bonds 4.8 % Low Duration Bonds 4.7 % Low Duration Bonds 6.9 % Investment Grade Bonds 4.3 % High Yield Bonds 2.7 % Investment Grade Bonds 5 .2% Investment Grade Bonds 6 .2% Investment Grade Bonds 7 .2% Cash 4.9 % US Treasuries 2.8% High Yield Bonds 56.3 % US Treasuries 14.0 % US Treasuries 9.1 % High Yield Bonds 11.8 % Cash 3.1 % 2009 2008 2007 2006 2005
  10. 10. Diversify Further Within Bonds: Maturity Asset allocation basics Source: PSN Enterprise. For informational purposes only. Past performance does not guarantee or indicate future results. Investing involves risk. It is not possible to invest directly in an index. The information shown does not reflect any particular investment. Performance returns assume the reinvestment of all distributions. Muni 1-3 Years is represented by the ML 1-3 Year Municipal Securities Index. Muni 3-7 Years is represented by the ML 3-7 Year Municipal Securities Index. Muni 7-12 Years is represented by the ML 7-12 Year Municipal Securities Index. Muni 12-22 Years is represented by the ML 12-22 Year Municipal Securities Index. Muni 22+ Years is represented by the ML 22+ Year Municipal Securities Index. Calendar Year Total Returns Muni 1-3 Years 4.2% Muni 22+ Years -14.5% Muni 22+ Years 0.9% Muni 1-3 Years 3.3% Muni 3-7 Years 1.3% Muni 3-7 Years 7.2% Muni 12-22 Years -6.3% Muni 12-22 Years 2.9% Muni 3-7 Years 3.4% Muni 1-3 Years 1.4% Muni 7-12 Years 9.8% Muni 7-12 Years 2.2% Muni 1-3 Years 4.7% Muni 7-12 Years 4.6% Muni 7-12 Years 2.8% Muni 12-22 Years 17.5% Muni 1-3 Years 5.2% Muni 7-12 Years 4.8% Muni 12-22 Years 5.4% Muni 12-22 Years 4.4% Muni 22+ Years 23.6% Muni 3-7 Years 5.9% Muni 3-7 Years 5.3% Muni 22+ Years 6.6% Muni 22+ Years 6.8% 2009 2008 2007 2006 2005
  11. 11. Three Major Benefits of Asset Allocation Key benefits of asset allocation 1 Gain exposure to rotating market leaders 2 Help reduce exposure to volatility 3 Potentially increase your returns
  12. 12. Gain Exposure to Rotating Market Leaders 1 Key benefits of asset allocation Year First Second Third Source: PSN Enterprise. Past performance does not guarantee or indicate future results. Investing involves risk. This information is for illustrative purposes only. It does not reflect any particular investment. Large Cap Value stocks—Russell 1000 Value Index. Large Cap Growth stocks—Russell 1000 Growth Index. Large Cap Core stocks—S&P 500 Index. Small Cap stocks—Russell 2000 Index. International stocks—MSCI EAFE Index. Fixed Income—Barclays Capital US Aggregate Index. Cash—Merrill Lynch US Treasury Bill 3 Month Index. It is not possible to invest directly in an index. Top three asset classes: Total Returns 2000-2009 Fixed Income International Large Cap Growth 2007 Small Cap Cash Fixed Income 2008 Small Cap International Large Cap Growth 2009 Cash Large Cap Value Fixed Income 2000 Small Cap Large Cap Value International 2006 Large Cap Growth Large Cap Value International 2005 Large Cap Value Small Cap International 2004 Large Cap Value International Small Cap 2003 Large Cap Value Cash Fixed Income 2002 Small Cap Cash Fixed Income 2001
  13. 13. Help Reduce Exposure to Volatility 2 Key benefits of asset allocation Sources: BlackRock; PSN Enterprise. Past performance does not guarantee or indicate future results. Investing involves risk. Stocks are represented by the S&P 500 Index. Bonds are represented by the Merrill Lynch US Treasuries 10+ Year Bond Index. Bonds held to maturity offer a fixed rate of return. It is not possible to invest directly in an index. The Efficient Frontier: 1980-2009 100% Stocks 100% Bonds
  14. 14. Potentially Increase Your Returns 3 Key benefits of asset allocation Return: 7.4% Risk: 3.5% Cash 24% Stocks 8% Bonds 68% Return: 7.6% Risk: 3.5% Cash 20% Bonds 80% Higher Return Portfolio Fixed Income Portfolio Asset allocation does not assure a profit or protect against a loss. Source: PSN Enterprise, BlackRock. Risk and return are measured by standard deviation and compound annual return, respectively. They are based on monthly data over the period 1984 to 2008. Stocks are represented by the performance of the S&P 500® Index, bonds by the Barclays Capital Bond Index and cash by the Merrill Lynch 3-month Treasury Bill Index. It is not possible to invest in an index. Past performance does not guarantee or indicate future results. The information provided is for illustrative purposes only and is not meant to represent the performance of any particular investment.
  15. 15. Asset Allocation Is Personal How to use asset allocation Aggressive Conservative Small-Cap Stocks Large-Cap Stocks High-Yield Bonds International Stocks Mortgage Bonds Cash Government Bonds The above allocations are for illustrative purposes only and are not intended as investment advice. 10% 10% 25% 10% 40% 5% 20% 20% 40% 5% 15% Mortgage Bonds Cash Large-Cap Stocks International Stocks
  16. 16. Asset Allocation Requires Tune Ups How to use asset allocation *Standard deviations are calculated using monthly returns. Sources: BlackRock, PSN Enterprise. Stocks are represented by 25% Russell 1000 Value Index, 25% Russell 1000 Growth Index, 25% Russell 2500 Index and 25% MSCI EAFE Index. Bonds are represented by the Barclays Capital US Aggregate Bond Index. It is not possible to invest directly in an index. Assumes reinvestment of all dividends Investment of $1,000,000 in a Portfolio Containing 50% Stocks and 50% Bonds on 1.1.85 Bonds 50% Stocks 50% Bonds 50% Final Portfolio Value: $10,485,848 25-Year Average Annual Return: 9.9% 25-Year Standard Deviation*: 8.3% Portfolio with Annual Rebalancing on 12.31.09 Bonds 38% Stocks 62% Final Portfolio Value: $9,413,351 25 Year Average Annual Return: 9.4% 25 Year Standard Deviation*: 10.2% Portfolio without Rebalancing on 12.31.09 Difference Final Portfolio Value: $1,072,497 25-Year Average Annual Return: 0.5% 25-Year Standard Deviation*: 1.9%
  17. 17. Dollar Cost Averaging: Discipline Rewarded How to use asset allocation Hypothetical example. Does not represent any particular investment. No investment is risk free, and a systematic investment plan does not ensure profits or protect against losses in declining markets. Because Dollar-Cost averaging involves continuous investment in securities regardless of fluctuating price levels, you should carefully consider your ability to continue to purchase during periods of price declines. Add dollar cost averaging $19.44 ($12,000/617.3) $20.25 ($243/12) Average Cost per Share (Dollar-Cost Averaging) Average Price per Share $12,000 617.3 $243 Total $1,000 37 $27 December $1,000 40 $25 November $1,000 50 $20 October $1,000 58.8 $17 September $1,000 66.7 $15 August $1,000 66.7 $15 July $1,000 62.5 $16 June $1,000 55.6 $18 May $1,000 50 $20 April $1,000 50 $20 March $1,000 40 $25 February $1,000 40 $25 January Cost Shares Purchased Price/Share Month Purchased
  18. 18. Risks of Asset Allocation 1 General market risk (value of portfolios will fluctuate with market conditions) 2 Asset allocation does not assure a profit or protect against a loss 3 Performance is dependant on ability to select appropriate asset categories
  19. 19. Important Information The S&P 500 Index is an unmanaged index that consists of the common stocks of 500 large capitalization companies, within various industrial sectors, most of which are listed on the New York Stock Exchange. The S&P MidCap 400 Index is a market value-weighted index that consists of 400 domestic stocks and measures the performance of the midsize company segment of the US market. The S&P 600 SmallCap 600 Index is an unmanaged market-value weighted index consisting of 600 domestic stocks, representing all major industries in the small-capitalization of the US stock market. The Merrill Lynch US High Yield Master Index tracks the performance of below investment-grade US dollar-denominated corporate bonds publicly issued in the US domestic market. The Merrill Lynch US Treasury Bill 3 Month Index is an unmanaged index based on the value of a 3-month Treasury Bill assumed to be purchased at the beginning of the month and rolled into another single issue at the end of the month. The Merrill Lynch US Treasury Bill Master Index tracks the performance of all outstanding Treasury Bills issued by the US government. The Merrill Lynch 1-3 Year Corporate & Government Index is comprised of investment grade corporate bonds and agency and US Treasury securities with a maturity ranging from one to three years. The Merrill Lynch US Domestic Master Index includes a mixture of government bonds, corporate bonds and mortgage pass-through securities of investment-grade quality, having maturity greater than or equal to one year. The Merrill Lynch 1-3 Year Municipal Securities Index tracks the performance of municipal investment-grade debt of US municipalities having at least one year and less than three years remaining term to maturity. The Merrill Lynch 3-7 Year Municipal Securities Index tracks the performance of municipal investment-grade debt of US municipalities having at least three years and less than seven years remaining term to maturity. The Merrill Lynch 7-12 Year Municipal Securities Index tracks the performance of municipal investment-grade debt of US municipalities having at least seven years and less than 12 years remaining term to maturity. The Merrill Lynch 12-22 Year Municipal Securities Index tracks the performance of municipal investment-grade debt of US municipalities having at least 12 years and less than 22 years remaining term to maturity. The Merrill Lynch 22+ Year Municipal Securities Index tracks the performance of municipal investment-grade debt of US municipalities having at least 22 years remaining term to maturity. The Merrill Lynch Municipal Master Index tracks the performance of the investment-grade US municipal bond market.
  20. 20. Important Information (cont’d) The Russell 1000 Value Index is composed of those Russell 1000 securities with less-than-average growth orientation, generally having low price-to-book and price-to-earnings ratios, higher dividend yields and lower forecasted growth values. The Russell 1000 Growth Index is composed of those Russell 1000 securities with greater-than-average growth orientation, generally having higher price-to-book and price-to-earnings ratios, lower dividend yields and higher forecasted growth values. The Russell 2000 Index is a market-weighted small capitalization index composed of the smaller 2,000 stocks, ranked by market capitalization, of the Russell 3000 Index. The Russell 2500 Index consists of the bottom 500 companies in the Russell 1000 Index, as ranked by total market capitalization, and all 2,000 companies in the Russell 2000 Index. The Morgan Stanley Capital International (MSCI) EAFE Index represents international equity performance and is a capitalization-weighted index based on securities from Europe, Australasia and the Far East. The Barclays Capital Aggregate Bond Index is an unmanaged index composed of more than 5,000 investment-grade taxable bonds. The Merrill Lynch US Treasuries 10+ Year Index is an unmanaged index which includes US Treasury securities with maturities greater than 10 years.
  21. 21. Investing involves risk. This presentation is provided as an educational tool only. BlackRock is not engaged in rendering any legal, tax, accounting or investment advice. Investors should consult with qualified professionals for this type of advice. Data not provided by BlackRock, although deemed to be reliable, is not guaranteed as to accuracy or completeness. You should consider the investment objectives, risks, charges and expenses of any BlackRock mutual fund carefully before investing. The fund’s prospectus contains this and other information about the fund and is available by calling 800-882-0052 or from your financial professional. The prospectus should be read carefully before investing. | NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE | Important Information (cont’d) BLACKROCK is a registered trademark of BlackRock, Inc. Prepared by BlackRock Investments, LLC, member FINRA © 2010 BlackRock, Inc. All Rights Reserved Feburary 2010
  • abesnaskar

    Jan. 29, 2018
  • ShairaMadalipay

    Nov. 23, 2015
  • LeslieVanZee

    Nov. 5, 2015
  • mswabb

    Jan. 11, 2012
  • tlneedham

    Sep. 27, 2010

Asset Allocation And Your Portfolio

Views

Total views

4,953

On Slideshare

0

From embeds

0

Number of embeds

18

Actions

Downloads

319

Shares

0

Comments

0

Likes

5

×