Reduce the Risk
The key to Modern Portfolio Theory was the revelation that the risk of any investment can be reduced or performance increased by creating a portfolio of diverse and non-correlated assets. The general premise of tactical and quantitative asset allocation is to reduce the volatility risks and achieve returns that exceed the target benchmark. These strategies attempt to create extra value by taking advantage of certain situations in the marketplace. Asset allocation does not ensure a profit or guarantee against loss; it is a method used to manage risk.