Market Hotline


Here you will find weekly updates on dynamic, risk managed investing along with key solution updates.

Active Management Update Print PDF

Welcome to our active management update on the market



In this week’s Market Hotline, Flexible Plan’s president, Jerry Wagner, talked about diversification. He pointed out that asset-class diversification is a nice start, but it is not a complete solution. Why? Because as risks increase, so do the correlation among asset classes. To illustrate this, I have provided the following graph of stocks, bonds, and gold (via total-return ETFs) covering the year 2008. We can clearly see here that asset classes were not a defender of capital in an environment where investors wanted their capital out of every market, not just one market.

Here’s another way to think of it: Asset-class diversification is an important concept and a great place to start when constructing a portfolio. Nearly everyone in the business does this, including Flexible Plan. This step by itself spreads risk among asset classes much the same way a real estate investor invests in multiple properties to spread their risk beyond a single property and location. However—and this is important—asset-class diversification does not manage the risk associated with investing in multiple asset classes.

Adding a layer of diverse actively managed strategies to an array of asset classes is what provides risk-managed, asset-class-diversified portfolios to investors in all risk profiles. And it is this risk-management experience and expertise that sets Flexible Plan apart from much of our competition.

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To our In My Opinion readers:
Everything in the newsletter pertains to strategies available on our Strategic Solutions platform at Trust Company of America. The same strategies are implemented on many other products: mutual funds, variable annuity, variable life and retirement platforms. Therefore, we expect the strategic discussion may be of interest to you. Note, however, that since these products have their own subaccount and fund universes and different internal expenses, the results and trading of the same strategy on other platforms may differ substantially from those described herein.

In My Opinion: Managed Retirement Plan Participants:
Most of you are managed using Lifetime Evolution and our sub-advised funds, so those topics will be most applicable to your account. But, more and more of you are in plans using Market Leaders. If so, that newsletter section may interest you