How To Allocate Your Assets In An Active Investment Strategy

How should I allocate my assets in an active investment strategy?

If you're a consumed investor you've got to consume strategy. The approach is that you need to create an asset allocation - a mixture of stocks and bonds - and you have to create that allocation yourself. You then mix both index funds, passive funds with active managers. The question is, "what do I use index funds for and what do I use active managers for?" Well, for the efficient asset classes, remember those asset classes where the information forms very quickly, and everyone knows everything? You might as well use an index fund because an active manager is not going to be able to know anything to really be able to beat the benchmark. But for those inefficient asset classes, for example small cap securities or international securities, those are areas where an active manager, through his or her research, might actually know something that others dont. So those are the asset classes where you want an active manager.