The lost art of asset allocation

As managers place increasing emphasis on stock selection, asset allocation is becoming a forgotten tool to boost the value of a portfolio

Fund managers often spend a significant amount of time talking about the value added from stock selection. This is perhaps understandable, as describing the companies that a fund invests in provides automatic interest for the reader, especially if some familiar names are featured. However, stock selection is by no means the only source of alpha in portfolios. Allocating money correctly between equities, bonds, property, cash and, in some cases, more esoteric assets like forestry and physical commodities is just as skilful and can make a significant difference to returns. Indeed, looking b...