Our Asset Management Strategy

Fisher Investments uses a simple framework called The Four Market Conditions to define appropriate investment strategies relative to possible market conditions. It acts as a guide and provides clear initial direction about where to invest while minimizing certain cognitive errors.

The Four Market Conditions

The Four Market Conditions follow strategic asset allocation rather than a tactical asset allocation model to guide our behavior as portfolio managers. Based on our market forecasts, this tool can assist in our assumptions of benchmark risk and absolute return risk and keep us from straying far from the benchmark for too long. These forecasts stand as a summary of both global and sentimental market drivers.

Condition*

Typical Action for a 100% Equity Benchmark Account

We forecast Up a Lot (+20% or more)

  • Be 100% in equities
  • Assume small benchmark risk
  • Assume normal absolute return risk

We forecast Up a Little (Up 0% to 20%)

  • Be 100% in equities
  • Assume small benchmark risk
  • Assume normal absolute return risk

We forecast Down a Little (Down 0% to 20%)

  • Be 100% in equities
  • Assume small benchmark risk
  • Assume normal absolute return risk

We forecast Down a Lot (-20% or more)

  • Be less than 100% in equities
  • Assume large benchmark risk
  • Reduce absolute return risk

*On a forward-looking basis over a prolonged period (one year or greater). No assurances are made regarding the accuracy of any market forecast

Interpreting the Four Market Conditions Model

The Four Market Conditions framework simplifies possible market conditions to help determine generally appropriate investment strategies and can assist in choosing a more global tactical asset allocation model. It acts as a guide and provides clear initial direction about where to invest while minimizing certain cognitive errors.

The Four Market Conditions framework should not be interpreted to mean our asset allocation strategy creates a product with higher returns and less risk than a normal equity portfolio, or that it is even necessarily less risky than a normal equity portfolio. The Four Market Conditions framework does not guarantee our forecast will always be correct; it also does not guarantee a portfolio that captures growth on the upside and capital preservation on the downside, nor does it protect portfolios or make them any safer than they would be otherwise.

Asset allocation is an important component and consideration of your investment strategy. With a detailed understanding of your long-term investment objectives and time horizon, we aim to provide an asset allocation strategy to help you achieve your investment goals.