RT Journal Article SR Electronic T1 Adaptive Portfolios and the Power of Diversification JF The Journal of Investing FD Institutional Investor Journals SP joi.2019.1.089 DO 10.3905/joi.2019.1.089 A1 Jürgen Vandenbroucke YR 2019 UL https://pm-research.com/content/early/2019/05/09/joi.2019.1.089.abstract AB The article gives a qualitative description of an advisory or discretionary investment process that manages the emotional aspect of investing. Portfolios are adaptive, meaning they automatically adjust their allocation in response to changing market conditions. The adjustments are model-based and transparent, and align in terms of frequency and magnitude with the investor’s emotionality. The process looks beyond the risk-focused paradigm in relation to investor profiling, product positioning, and portfolio construction. First, investor profiles distinguish between the attitude toward risk and the attitude toward loss. Second, products differentiate in terms of variance and in terms of skewness. Finally, adaptive portfolios represent a client centric combination of products that lifts the power of diversification to a higher level and ultimately contributes to long term buy-and-hold investor behavior.TOPICS: Mutual fund performance, passive strategies, mutual funds/passive investing/indexing