Home Breadcrumb caret Investments Breadcrumb caret Market Insights Takeaway: Consider risk allocation We’re committed to making your practice better, so all this month, we’re delivering you a daily takeaway. By Staff | May 16, 2012 | Last updated on May 16, 2012 1 min read We’re committed to making your practice better, so all this month, we’re delivering you a daily takeaway. Today’s takeaway is… Consider risk allocation Take a typical pension plan asset mix: 36% Canadian bonds 35% Canadian equity 14% international equity 13% international equity, EAFE 2% cash When viewing it by asset allocation alone, the portfolio looks to be well diversified; most investors would be pleased with the amount of diversification represented. But look at the same portfolio through the lens of risk and we see a different picture. Portfolio risk, as measured by standard deviation, is approximately 9.4%. When reviewing the mix from the perspective of risk allocation, it would appear equities account for 62% of the portfolio, yet are responsible for 96% of the total risk. Want more? Read: From asset to risk allocation Staff The staff of Advisor.ca have been covering news for financial advisors since 1998. Save Stroke 1 Print Group 8 Share LI logo