Asset Allocation

Why is Asset Allocation So Important?

Research has shown that a portfolio’s volatility depends primarily on how assets are allocated among stocks, bonds, and cash investments rather than the specific investments chosen within each asset class. Without proper asset allocation, the portfolio may be exposed to an inappropriate level of market risk.

MidAtlantic designs portfolios that are well-diversified across various asset classes, attempting to optimize returns from overall market performance, while minimizing investment risk.

To create portfolios with excellent risk/return characteristics and below average expenses, we utilize:

• Actively managed mutual funds
• Low-cost index funds
• Exchange Traded Funds
• Separately Managed Accounts
• Individual securities

All investment decisions are made with a consideration of investment account expenses. These expenses reduce the net return of any portfolio. Lower expense ratios directly result in higher total returns, with all other factors being equal. This means that a lower expense portfolio will have a better risk/return profile than an identical portfolio with higher expenses.

Tax-Efficient Investing

Taxes can have a major impact on portfolio performance. We aim to ensure that portfolios are invested as tax-efficiently as possible. We take into consideration all possible tax implications, and we design investment strategies to minimize portfolio taxes and maximize after-tax returns. These strategies include selecting portfolio components that attempt to minimize capital gains, as well as selling portfolio components that will help to reduce taxable gains.