Tactical Asset Class Shifts

Gemmer works diligently to understand the various forces at play on the markets. We scour research reports, market analysis and other sources to analyze and be prepared for “secular” trends – those looking out over a long-term time frame (usually three to five years), as well as to understand the cyclical outlook (three to twelve months’ time frame). This research allows us to create an asset class forecast that drives our portfolio structure for the short and long-term. You can read more about Gemmer’s approach to creating portfolios at Modern Portfolio Theory.

In practical terms, this process ensures that we make incremental allocation adjustments among the asset classes in order to reduce exposure to overpriced markets and/or to increase exposure to undervalued markets or areas that offer compelling opportunities. As a result of these "tactical asset class shifts", a portfolio’s holdings will change from the "strategic allocation" weighting for each asset class. Importantly, however, the portfolios we recommend always will consist of core holdings among each of the three major asset classes (domestic stocks, foreign stocks, and bonds/cash).