How do you approach allocation decisions within my portfolio?

Allocation decisions are based on modern portfolio theory and optimization programs. Optimizations are based on the following estimates for asset classes: investment returns, standard deviations, and correlations. From these estimates we will construct hypothetical, optimal portfolios. Optimization (modern portfolio theory) is used to find the highest expected return for a certain level of volatility (the efficient frontier). It is important to note that optimization is only a tool. Predicting the future with accuracy is impossible. Therefore, the output of optimization is always adjusted based on diversification issues, investment experience, additional in-house research, prudence issues, client characteristics, tactical views and other fiduciary responsibilities.