{"id":2602,"date":"2020-09-07T11:38:00","date_gmt":"2020-09-07T03:38:00","guid":{"rendered":"https:\/\/www.mdis.edu.sg\/blog\/?p=2602"},"modified":"2020-09-17T11:42:32","modified_gmt":"2020-09-17T03:42:32","slug":"modern-asset-allocation-for-wealth-management","status":"publish","type":"post","link":"https:\/\/www.mdis.edu.sg\/blog\/modern-asset-allocation-for-wealth-management\/","title":{"rendered":"Modern Asset Allocation for Wealth Management"},"content":{"rendered":"\n<p><strong>Book Title: &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Modern Asset Allocation for Wealth Management<\/strong><\/p>\n\n\n\n<p><strong>Author: &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; David M. Berns PhD (2019) 1<sup>st<\/sup>\nEdition, Wiley Finance<\/strong><\/p>\n\n\n\n<p>Harry Markowitz introduced the Modern Portfolio Theory in 1952 and was awarded the Nobel Prize in Economics in 1990 for his work. This theory is taught in all Investment modules the world over and it explains the concept of diversification very well. Using the Modern Portfolio Theory, one can derive an \u2018Efficient Frontier\u2019 where the asset allocation is optimal for various levels of risk. Unfortunately, it is not as practical to implement in real life, when advising clients. <\/p>\n\n\n\n<p>David Berns\u2019 <em>Modern Asset Allocation for Wealth Management<\/em> provides a more\ncomplete and practical guide to asset allocation. Instead of using mean and\nvariance to measure asset class performance, the author also incorporates the\nthird and fourth \u2018statistical moments\u2019, which are skewness and kurtosis into\nthe framework. In addition, this book\u2019s methodology differs in that the\nclient\u2019s risk profile is evaluated based on behavioural finance theory.\nTraditional models typically utilise a risk tolerance questionnaire to assess\nhow much risk an investor can take but this framework measures the client\u2019s\nrisk profile based on three parameters, namely (i) risk aversion, (ii) loss\naversion and (iii) reflection. <\/p>\n\n\n\n<p>With the three-dimensional client\nutility function, the portfolio optimiser provides a comprehensive view of the\nclient\u2019s preference mapped to portfolios constructed based on statistically\nvalid data which is minimally sensitive to estimation errors.<\/p>\n\n\n\n<p>The book is broken down into five chapters. Chapter 1 introduces the asset allocation methodology. In Chapters 2 to 5, the book provides a step by step guide to constructing the investment portfolio based on the client\u2019s preference. The general assumptions in the framework include a long term view of investments in the assets that are highly liquid and allowing withdrawals to only occur after retirement.\u00a0<a class=\"rank-math-link\"> <\/a>These are valid and necessary assumptions made to reduce the complexity of the framework. <\/p>\n\n\n\n<p><a href=\"https:\/\/www.mdis.edu.sg\/master-of-business-administration\" target=\"_blank\" aria-label=\"MBA students (opens in a new tab)\" rel=\"noreferrer noopener\" class=\"rank-math-link\">MBA students<\/a> and final year degree students in finance, as well as practising financial advisors will find this book useful as it provides a practical and complete guide to construct a portfolio of assets that meets the investor\u2019s needs.&nbsp; <\/p>\n","protected":false},"excerpt":{"rendered":"<p>Book Title: &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Modern Asset Allocation for Wealth Management Author: &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; David M. Berns PhD (2019) 1st Edition, Wiley Finance Harry Markowitz introduced the Modern Portfolio Theory in 1952 and was awarded the Nobel Prize in Economics in 1990 for his work. This theory is taught in all Investment modules the world over and it explains the concept of diversification very well. Using the Modern Portfolio Theory, one can derive an \u2018Efficient Frontier\u2019 where the asset allocation is optimal for various levels of risk. Unfortunately, it is not as practical to implement in real life, when advising clients. David [&hellip;]<\/p>\n","protected":false},"author":297,"featured_media":2605,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[12],"tags":[],"_links":{"self":[{"href":"https:\/\/www.mdis.edu.sg\/blog\/wp-json\/wp\/v2\/posts\/2602"}],"collection":[{"href":"https:\/\/www.mdis.edu.sg\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.mdis.edu.sg\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.mdis.edu.sg\/blog\/wp-json\/wp\/v2\/users\/297"}],"replies":[{"embeddable":true,"href":"https:\/\/www.mdis.edu.sg\/blog\/wp-json\/wp\/v2\/comments?post=2602"}],"version-history":[{"count":4,"href":"https:\/\/www.mdis.edu.sg\/blog\/wp-json\/wp\/v2\/posts\/2602\/revisions"}],"predecessor-version":[{"id":2608,"href":"https:\/\/www.mdis.edu.sg\/blog\/wp-json\/wp\/v2\/posts\/2602\/revisions\/2608"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.mdis.edu.sg\/blog\/wp-json\/wp\/v2\/media\/2605"}],"wp:attachment":[{"href":"https:\/\/www.mdis.edu.sg\/blog\/wp-json\/wp\/v2\/media?parent=2602"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.mdis.edu.sg\/blog\/wp-json\/wp\/v2\/categories?post=2602"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.mdis.edu.sg\/blog\/wp-json\/wp\/v2\/tags?post=2602"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}