Portfolio Design: A Modern Approach to Asset Allocation

“Richard Marston’s tremendous insight into building well-diversified and successful investment portfolios has benefited a generation of financial advisors and individual and institutional investors. Marston offers a dynamic and cutting-edge understanding of the asset allocation process.”
―Phil C. Shaffer, CIMA, Managing Director, Graystone Consulting, Morgan Stanley Smith Barney

“After taking a bruising the past couple of years, many advisors who only learned the basics of asset allocation have too quickly dismissed the science of effective portfolio design. Many of these advisors have turned their back on the essential knowledge, tools, and skills for a new age of sophisticated investors. For more than twenty-three years, the best and brightest financial advisors in the world have learned asset allocation and portfolio design strategies from Dr. Marston on their path to become Certified Investment Management AnalystSM (CIMA®) practitioners, the premier credential for investment consultants. Advisors who are serious about serving their clients’ investment objectives will consume this book from cover to cover.”
―Sean R. Walters, CEO/Executive Director, Investment Management Consultants Association®, the credentialing body for CIMA® certification

“Dick has done it again! He has synthesized a vast body of knowledge into an incisive foundational tome for financial advisers. He uses the prism of historical returns to make sense of recent downturns and dispels common myths in various asset classes. For financial advisers seeking a solid foundation on which to base their advice, Portfolio Design is a must-read.”
―Stephen M. Horan, PhD, CFA, Head, Professional Education Content and Private Wealth, CFA Institute

Portfolio design?choosing the right mix of assets appropriate to a particular investor?is the key to successful investing. It can help you accumulate wealth over time, while cushioning the blow of possible economic downturns. But in order to successfully achieve this goal, you need to be familiar with all of the major asset classes that go into modern portfolios and learn how much they each add to portfolio diversification.

This book is about the individual assets in a portfolio, and how they perform together in a portfolio. For example, what does real estate or private equity add to a portfolio? And nobody understands this better than author Richard Marston?director of the Private Wealth Management program at Wharton?whose extensive academic and professional asset allocation experience gives him a comprehensive perspective of this dynamic discipline.

Based on sessions Marston developed for the Certified Investment Management AnalystSM (CIMA®) program at Wharton, Portfolio Design is written for financial advisors who want to provide diversified portfolios for their clients?whether the clients are high-net-worth individuals or institutional investors. Rich in information about individual asset classes, including traditional assets like stocks and bonds as well as “alternative investments” such as hedge funds, private equity, real estate, and commodities, this book offers a fresh look at asset allocation, and discusses its importance in today’s investment environment. Page by page, this book:

• Outlines methods for estimating long-run returns for a diversified portfolio

  • Examines the roles that value, growth, and small-cap stocks play in a portfolio

    • Discusses the importance of investing in foreign equities and emerging stock markets

      • Explores the modern fixed-income market in detail

        • Assesses the effect alternative investments can have on a portfolio

          • Details feasible spending rules for foundations as well as individuals facing retirement

            Thoughtful asset allocation provides discipline to the investment process and gives you the best chance of building and safeguarding wealth. This book will guide you through the major decisions that need to be made when designing a portfolio and will put you in the best position to balance the risk-reward relationship that is a part of this difficult endeavor.