With this analysis of the medium-high risk portfolio, we leap over the medium risk portfolio found at this site. The medium-high risk portfolio limits the bond/income asset class to 20%. Remember, we began with 80% allocated to the bond asset class, moved to 60%, then 40% and now 20% or something similar to what we hold in many portfolios tracked here at ITA Wealth Management.
Note the shift that is occurring. As we commit a smaller percentage to bonds, the projected return increases as does the projected uncertainty. The uncertainty is increasing at a faster rate relative to the projected return and that causes the Return/Uncertainty ratio to decline in value. Reducing the percentage to bonds also diminishes diversity and increases the Portfolio Autocorrelation. To increase projected return means giving up ground to several other important portfolio parameters. Is there a way to hold on to a higher return will keeping DM, PA, and uncertainty within our goals? Stay in touch for a possible solution within the week.