Framework for Constructing Globally Diversified Portfolios

Investing evokes emotion, and even sophisticated investors should arm themselves with a long-term perspective and a disciplined approach. Abandoning a planned investment strategy can be costly, and research has shown that some of the most significant derailers are behavioral: the failure to rebalance, the allure of market-timing, and the temptation to chase performance. In examining the five major components for creating and maintaining diversified portfolios, we believe that the top-down hierarchy (when aligned with the investor’s goals and constraints) offers the best chance for success.