OpenMarkets Weekly: Asset Allocation

At a Glance

  • Institutions trading in financial markets move capital using three popular methods

When individual investors hear “asset allocation” thoughts likely turn to portfolio diversification: the mix of stocks, bonds, cash or other assets that make up an investment strategy. For institutional traders in financial markets, the meaning of asset allocation is often different, referring to capital moving from one market to another.

In this week’s episode of OpenMarkets Weekly, Jack Bouroudjian explains how strategic movement of funds helps institutions trading in financial markets achieve their objectives. He highlights three popular ways they allocate assets to accomplish this:

1.Intra market asset allocation

2.Inter market asset allocations

3.Global asset allocations

While the time horizon for individual investment strategies is usually years or decades, strategies used by institutions in futures markets are often days or even hours, Jack says. He highlights some examples of capital moving from fixed income to equities, or from one country’s bonds to another. Understanding how assets are allocated and spotting trends in capital movement helps market watchers and participants gauge the market at a given time.

“Looking at the differences gives us an idea of the various types of strategies. Even better, it gives us an idea into the world of capital movement,” he says.

Watch this week’s full episode above.

OpenMarkets is an online magazine and blog focused on global markets and economic trends. It combines feature articles, news briefs and videos with contributions from leaders in business, finance, economics and politics in an interactive forum designed to foster conversation around the issues and ideas shaping our industry.

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