Adjusting to changing market conditions
Unlike some popular asset allocation techniques, ours adjusts to changing market conditions. This is because we recalculate the optimal investment mix fairly frequently. As market conditions change, the optimal investment mix that we recommend changes as well. Thus, our recommendations automatically adjust to a changing market.
Other asset allocation techniques calculate the expected return and risk either only once, or very infrequently, based on very long-term data. This is inappropriate, since these parameters do change over time.
For example, another approach might determine that, over the very long term, stocks outperform bonds. So the approach might recommend that investors always have a lot of their money in stocks as opposed to bonds. It would stick with this recommendation even during times when bonds outperform stocks, such as during stock market crashes. By having a system that automatically adjusts to changing market conditions, we do not make such a mistake.