When appropriate, we suggest a Portfolio consist of asset allocation models which consist of a number of underlying stock and bond funds selected by the money manager who is providing tactical allocation based on current economic and market conditions. Following are advantages of this approach.

It increases the diversity of the Portfolio significantly. Within one model, you are essentially invested in 10, 15, or more funds at one time and hundreds and in some cases even thousands of stocks, bonds, cash, and alternative asset classes.

• The money managers monitor the asset allocation models and have the ability to change the allocation at any time based on their perception of current economic and market conditions.
• You have the ability to select asset allocation funds that have different objectives, risk profiles, and time horizons and can change from one type of allocation to another based on personal circumstances and overall market conditions.
• Some money management groups offer several asset allocation funds having risk profiles ranging from conservative to growth, which give you the flexibility to change from a growth allocation to a conservative allocation with one phone call.
• Other asset allocation funds are very broad and though essentially moderate in risk profile, have the ability to be conservative or growth oriented, again depending on the money manager's perception of existing market and economic conditions.
• Some models include non-traditional asset classes such as commodities, real estate, indexes, and use of hedging strategies.
  

In short, the money managers in asset allocation funds are very flexible within the parameters of the fund and have the ability to react immediately to changing economic conditions which, though there is no guarantee for the future, can reduce risk and volatility and enhance long-term total return.

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