Adaptive Asset Allocation
Adaptive Asset Allocation is the process of changing the allocation of assets. Adaptive Asset Allocation is an asset allocation that changes over time. Any allocation can change for many different reasons. The question is: how and why does the asset allocation change?
Adaptive is showing or having a capacity for or tendency toward adaptation.
Adaptation is the process of changing to fit some purpose or situation: the process of adapting.
Adapt is to change your behavior so that it is easier to live in a particular place or situation. Or, to change (something) so that it functions better or is better suited for a purpose.
Asset, in the case of “asset allocation” is a world market. It could be cash, currency, bonds, stocks, commodities, or alternatives like volatility, REITs, MLPs, private equity, etc.
Allocate is to divide and give out (something) for a special reason or to particular people, companies, etc. In the case of asset allocation, it refers to how money is located into different markets or assets like cash, currency, bonds, stocks, commodities, or alternatives like volatility, REITs, MLPs, private equity, etc.
Adaptive Asset Allocation, then, must mean the activity of allocating assets is adaptive. That is, Adaptive Asset Allocation changes over time. The question remains, then, how and why does it change over time. And, does it work well? Are they good at it? Do they have a real performance history of actually doing it?
Adaptive Asset Allocation, by itself, doesn’t mean much more than that. Being adaptive can have good intentions, but with bad outcomes. Or, a few may be good at Adaptive Asset Allocation. We can only know by examining the actual performance history.
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