What is asset allocation?

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Coke or Pepsi? Consumer staples or consumer discretionary? Stocks or bonds?

“Here’s the one stock you should buy now for the best returns!”

“Now that you’ve finally figured out what the “Great Rotation” is, here’s how to play it with smart-beta multi-factor ETFs.”

“Don’t forget: Always buy low and sell high.”

The amount of advice you get constantly about investing can be overwhelming. It can even be contradictory, especially at unsettled moments like the current one. We’re either in the late innings of the economic cycle with a bit more room to run, or we’re at that point at the bottom of the ninth when everyone makes for the exits to avoid traffic.

That’s why it might be more useful than ever to think big. Instead of this stock or that trade, investors should take a holistic view of their investments, experts say. That approach, known as asset allocation, simply means finding the right balance between different asset classes, like stocks, bonds, and cash, and ignoring the daily tick-tock of market gyrations. And if that sounds too simplistic, here’s a secret: professionals do it that way, too.

Academic studies, including the granddaddy of “modern portfolio theory” by Harry Markowitz have shown that asset allocation, not picking specific winners and losers, is 90% of the game, said Richard Daskin, who manages money for clients through his firm, RSD Advisors. What’s more, he said, “it’s much more efficient. It allows a money manager to be more focused on your goals because he isn’t worried about, is Pepsi PEP, -0.10%   better than Coke KO, -0.34%  ?”

Anora Gaudiano, a senior advisor associate at New York-based Sontag Advisory, notes that constructing what are sometimes called “model portfolios” has become so common that it’s nearly “commoditized.”

Sontag advisors take a fairly common approach with clients, deciding together on what that household’s risk profile and investment objective are. “Say we decide that client is moderate-aggressive,” Gaudiano said. “That would mean, say, 60% stocks, 40% bonds.”

“Commoditized” doesn’t mean “cookie-cutter,” though. Some clients may have unique situations, like a heavy tax burden that may call for more exposure to municipal bonds, for example – but Sontag keeps its allocations just that high-level: stocks versus bonds.

“When we want to have US stock market exposure, we go to a large-cap index fund,” Gaudiano said. “That’s low-cost and difficult to beat no matter what you do.”

Daskin gets a little more granular, picking sectors – think consumer staples versus consumer discretionary – but no deeper. He also spends a lot of time thinking about risk. Rather than trading a client’s holdings every time the wind shifts, he asks, “is their portfolio diversified and resilient enough for different economic conditions?”

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The biggest consideration, Daskin said, whether individuals do it themselves or work with an advisor, is having a sense of how risk-averse they are. “Can you stand it if you lose 10%? 20%?” It’s better to ask that question every so often than to rely on old models that say young people should be more risk-averse, and grow more conservative as they age. Younger investors may well need to protect a nest egg if they want to use it for, say, a down payment on a home, Daskin points out.

(Here’s a very basic introduction to how individual investors can think about risk in asset allocation.)

Asset allocation isn’t just the preferred path of financial professionals who work with individuals.

Ned Davis Research is a global macro research firm that also provides financial advisory and asset management services to institutional investors. Will Geisdorf, one of the firm’s senior strategists, explained that the firm uses an old model suggested by the Wall Street Journal for their own in-house portfolio as a “static benchmark,” then adjusts according to economic conditions and other considerations.

The benchmark is 55% in stocks, 35% in bonds, and 10% in cash. But late last year, growing cautious, NDR strategists shifted their allocation to 40% stocks, 50% bonds, and 10% cash. “Thus advising maximum defensive positioning whatever your constraints and risk tolerance, we would view any rallying as an opportunity to lighten up ahead of increasing volatility in 2019,” they wrote.

See also: Why buying and selling a house could soon be as simple as trading stocks

It’s important for individual investors to remember that staying on top of economic, market, and political news enough to make even calls like those, that span the coming nine to 18 months, are time-consuming, Geisdorf said. Most retail investors would do best to “set it and forget it,” and remember that “broad exposure is best,” he added.

In fact, NDR just published a white paper about asset allocation, and noted that “over the last 92 years, the long-term real returns (i.e. net of inflation) for U.S. assets were 7% per year for stocks, and about 2.5% per year for bonds.

“Balanced portfolios (e.g. 60% equity, 35% bond and 5% cash) delivered a real return in the range of 4-5% per annum,” the paper authors said. “Investors could withdraw 4% of their balance each year without reducing the purchasing power of their investments.”

If the argument in favor of a broad, hands-off approach isn’t convincing enough, here’s one last piece of wisdom. Consider what Warren Buffett said of his instructions to the trustee who would manage his own family’s wealth after his death.

“Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund VOO, -0.24%  . (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee managers.”

Read: Forget the active vs. passive debate — what matters most is selecting the best portfolio mix