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  • Tweaking Nusbaum's El-Erian Portfolio via ETFs [View article]
    I'm an avid reader of Nusbaum, and commented on this model when he posted it on his blog. One big disparity is that IGF is not really a way to own infrastructure (an asset class which delivers steady cash flow with minimal risk); a high percentage of this ETF is in industrial stocks.

    But more essentially, there's more to El-Erian's asset management than having a diversified portfolio. A great deal of the book is about risk management, which ETFs don't do at all; and "secular" or long-term shifts in the predominance of asset classes, which require the ability to analyze long-term economic trends and adjust the asset balances accordingly. The percentages you list are an often-quoted AVERAGE of El-Erian's proposed allocations; using fixed allocations would make for only a crude imitation of his model.

    And then, of course, as we learned a few months ago, there are times when asset allocation doesn't help you at all, and you need much broader risk-control techniques which are simply foreign to any kind of passive investment model.
    Feb 25 13:02 pm |Rating: +2 0 |Link to Comment
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