Asset allocation
Studies attribute most long-run portfolio variance to the asset-allocation decision — not stock picking, not timing. Getting the mix right is the highest-leverage thing an investor does.
Strategic vs tactical
Strategic allocation is your long-term target mix (e.g. 55% equities, 30% bonds, 10% alternatives, 5% cash) chosen to match your horizon and risk tolerance. Tactical allocation is small, deliberate tilts around that target based on valuation or regime. Most investors should spend 95% of their attention on strategic and 5% on tactical.
The 60/40 baseline
60% equities, 40% bonds has been the default balanced portfolio for decades because the two sleeves historically diversified each other. It still works most of the time — but 2022 showed that when both fall together, a balanced portfolio without alternatives has nowhere to hide.
The sleeve model
Growth sleeve — global equities, primarily via low-cost ETFs.
Income sleeve — investment-grade bonds, high-quality credit.
Defensive sleeve — cash, short-duration bonds, gold.
Alternatives sleeve — real assets, private markets, market-neutral yield strategies.
Each sleeve has its own risk budget, its own rebalancing rule, and its own role.
Rebalancing
Set thresholds (e.g. rebalance when a sleeve drifts more than 5 percentage points from target) or a calendar (annually). Rebalancing forces you to sell what has risen and buy what has fallen — an unemotional discipline that quietly adds return over decades.
Where the programme fits
A structured trading-based yield programme is an alternatives-sleeve holding. A typical allocation for a private investor might be 5–15% of the alternatives sleeve, or 1–5% of total portfolio — never the majority of net worth, and always sized to a drawdown you can survive.