With 2008 likely to be another volatile year for the markets, many money managers say a well-diversified portfolio is more important than ever, but some experts have varying ideas about what's in store for the different asset classes.
Michael Cuggino, portfolio manager of the Permanent Portfolio Fund, says there are currently a lot of economic and political uncertainties. Given that, he says “it would seem that an asset allocation diversification strategy would be extremely helpful for investors that don’t want to play the volatility on the market.”
To execute his fund’s asset allocation strategy, Cuggino invests in a combination of U.S. stocks and bonds, foreign bonds, real estate and commodities. “We think an investor needs some exposure to all if those areas and failure to do so opens up holes in an investor’s diversification strategy,” he says.
Because the fund, which is designed to preserve capital and provide low-risk growth, is more conservative oriented, Cuggino targets about a 15 percent weighting in U.S. stocks. His outlook on the group, though, is pretty optimistic.
“We think the economy will continue to grow and withstand risks to it,” he says, adding that currently, he expects the fund is probably a bit overweight U.S. stocks.
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