The return of volatility this year has brought opportunity—the opportunity to tactically increase allocations to an oversold asset class. This selloff has advisors and clients discussing how to nimbly take advantage if another correction looms. Before eyeing that entry point into a riskier asset class, however, advisors face a conundrum: How can they add a riskier — albeit attractively valued — asset class without upsetting the portfolio’s long-term risk profile?
It comes down to risk budgeting.
In a recent article written for Investment Advisor magazine, we dive further into a back-of-the-envelope calculation that shows how it works and illustrates the challenge in front of advisors. It also shows the understated role alternatives can play in bringing risk back in balance.
Read more in How to Use Alts and Capitalize on Volatility >