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By Sunder RAMKUMAR, Senior manager client analytics, Capital Group
Asset allocation is one of the most important investment planning decisions.
The key question: What is the best mix between stocks and bonds, and how should that mix change over time? By focusing on diversification, however, we may lose an important distinction: Not all equities are created equal.
Different types of stocks exhibit unique risk and return characteristics that can help offset the changing risks investors face. Better outcomes can be achieved by harnessing these traits, rather than simply holding the broad equity market and adding more bonds.
Although the philosophy of different equities for different investors may have fallen...
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