Asset Allocations

Proper asset allocation is essential to successful investing. Professional money managers have long recognized the benefit of investing across different asset classes including venture capital. In fact, the largest contributors to venture capital funds have historically been institutional investors such as pension funds, financial institutions, insurance companies, endowment funds, and large corporations. 

Why should you consider a similar strategy? By investing in different asset classes, such as stocks, bonds, cash and venture capital, you help reduce overall portfolio risk. Since each asset class responds differently to changing economic and market conditions, diversifying across different asset classes can help manage volatility in your portfolio. Signal Capital Management allows individual investors the ability to include institutional quality venture capital investments as a component of their overall portfolio allocation strategy. 

Picture your investment portfolio as a pyramid. The base of the pyramid, the largest percentage of your assets, is the foundation and should contain an adequate allocation of secure liquid investments. However, as you build on the foundation, you are able to take greater risks to achieve higher returns. The peak of the pyramid is for high growth investments, such as venture capital. By allocating a moderate percentage (5-15%) of your portfolio to more speculative investments, you raise the long-term return potential of your portfolio and help limit the risk to its overall performance. The goal is to match the returns you hope to achieve with the risk you can afford to take.