Mutual Fund Switching -- Asset Allocation for the 21st Century.

Would you like to make your portfolio grow faster while reducing your risk?

Well you can, if you are ready for a new turn on the outdated asset allocation. Asset allocation is an investment scheme whereby an investor should spread their assets across the different asset classes. This is based on the assumption that the asset classes will move in different directions most of the time. This diversification should prevent the investor from having significant losses due to a decline in a weak asset class, for as one asset class declines the other should increase, stocks verses bonds for example.

The main problem with asset allocation is that if it works perfectly, then the portfolio goes nowhere. If it is not balanced, meaning it is more heavily weighted towards stocks for example, and stocks funds are growing, even while bond funds or gold funds should be declining, the portfolio will increase albeit much slower than if it had it been using Fund Switching, the Dynamic Asset Allocation methodology and positioned in stocks exclusively. This type of unbalanced Asset Allocation can create portfolio growth; but, the portfolio is 100 percent invested and at higher risk, however, only benefiting from the marginal increase of one asset class over another. As an example consider two investments with the portfolio split equally between them.

Investment	Increase	Decease	Net return
Number 1	12		12
Number 2		10	10
Portfolio	12	10	2

Investment number one increases 12 percent. Investment number two declines 10 percent. The portfolio is 100 invested and 100 percent at risk but only returns 2 percent net.

Mutual Fund Switching or Dynamic Asset Allocation , on the other hand, is asset allocation without the blind, preset allocation structure. Mutual Fund Switching lets the market dictate when and how much to allocate to each sector. Rather than investing in all sectors equally or by some arbitrary non market related formula, Mutual Fund Switching still invests in all the different asset classes and allocates based on class strength. By comparing the asset classes' internal strength, velocity or trend, Mutual Fund Switching favorably weights the asset class with strength while avoiding the weak or declining asset class. It also makes sense both emotionally and financially. The investor decreases risk by avoiding the weakest market areas.

In strictly followed asset allocation, the investor would be constantly selling the stronger, increasing asset to reposition into the weaker declining asset. This is absurd. Asset allocation mocks the investor's Golden Rule: Let your profits run and cut you losses. Mutual Funds Switching embraces the Golden Rule. The secret lies in measuring class strength. With our Guerrilla Tactics Fund TargetingT we have created simple mathematical methods to measure the internal strength of indexes and mutual funds from different classes and based them from zero to one hundred. By design, the investor will allocate to funds with a strength rating of 50 or above and avoid those below. With weekly or monthly review the investor can dynamically modify their Mutual Fund Asset Allocation based on market strengths. The benefit is reduced exposure to weak areas of the market and increased allocation to the areas showing superior and increasing strength. Add the additional asset of Cash and conservative trend following Market Timing to the strategy and safety and returns can increase dramatically.