Beyond Diversification: What Every Investor Needs to Know About Asset Allocation

by Sebastien Page

Generate solid, long-term profits with a portfolio allocated for your investing needs

Asset allocation is the key to investing performance. Unfortunately, no single approach works perfectly―developing the right balance requires a clear-eyed look at the many models available to you, various investing methodologies, and your or your client’s level of risk tolerance. And that’s where this important guide comes in.

Written by a leading allocation expert from T. Rowe Price, Beyond Diversification provides the knowledge, insights, and approaches you need to make the best allocation decisions for your goals. This deep dive into the how’s and why’s of asset allocation is organized by the three decisive components of a successfully allocated
With examples from T. Rowe Price’s asset allocation team showing you how the process works in the real world, Beyond Diversification provides everything you need to find the asset combination that will deliver the results you seek. You’ll learn how to choose the right tradeoffs, build the most effective asset allocation combination for your needs, and dramatically increase your odds of success for the long run.

Genres: Finance, Economics, Money, Nonfiction

336 pages, Hardcover

Published October 14, 2020

About the author

Sébastien has more than two decades of leadership experience. As an author, he believes breakthroughs often happen when experts venture outside their field. That is why, in "The Psychology of Leadership," he went beyond finance and economics to study research in psychology.

He is currently Head of Global Multi-Asset and Chief Investment Officer at T. Rowe Price.

Sébastien won research paper awards from The Journal of Portfolio Management in 2003, 2010, 2011, and 2022 and the Financial Analysts Journal in 2010 and 2014. In addition to The Psychology of Leadership, he is the author of Beyond Diversification: What Every Investor Needs to Know About Asset Allocation (McGraw Hill, 2020) and the coauthor of Factor Investing and Asset Allocation (CFA Institute Research Foundation, 2016).

Sébastien is also a member of the editorial boards of the Journal of Portfolio Management and the Financial Analysts Journal, and the Board of Directors of the Institute for Quantitative Research in Finance (Q Group). He regularly appears in the media, including Bloomberg TV and CNBC, and was recently named amongst the 15 Top Voices in Finance by LinkedIn.

Reviews

[Trey Shipp · Rating 5 out of 5]

Sebastien Page makes Investment Theory Interesting

Admittedly, you may have to be interested in investment theory to begin with. But unlike other investment books, this one doesn’t kill that interest! It’s a fun book to read and covers the key topics every serious asset allocator is wrestling with now. Highly recommend!

[Alex Gravina · Rating 4 out of 5]

A really interesting piece on the state of portfolio theory. I appreciated the detail in it and the attempt to come to practical conclusions at the end.

I may need to read the physical book to truly take it in

[Aileen · Rating 5 out of 5]

Sebastian includes real life anecdotes on setting return and risk assumptions and portfolio asset allocation challenges. Notably each chapter starts with pearls of wisdom from his own life-long mentor (who is ultimately revealed). The publication date is November 2021, but Sebastian was wrapping up this book just at the nadir of the pandemic. He does include the impact of the March 2021 decline in a number of examples of dislocations and tail risk. I’d be interested in a follow-up essay on the signs of bubble formations as global economies emerge from here.

[Adam · Rating 3 out of 5]

Novice must read.

What my ear heard 👇

I have an unquestionable curiosity
I like to lean against the wind
There are no precise cookbook instructions because it future is not known & free lunches are rare
Get skin in the private equity game
You can't eat irr
In financial markets fear is more contagious then optimism

[Debbie · Rating 3 out of 5]

very complex for the retail investor

Thorough, yet the book is very complex and difficult to understand / utilize as an average small retail investor. Not as much help to me as I hoped it would be.

[Keven Wang · Rating 5 out of 5]

Technical and great insights

[John · Rating 3 out of 5]

The book was good but way more detailed than I wanted. The last three chapters are decent spark notes w take always and sample portfolios for different scenarios.

[Fearless Leader · Rating 4 out of 5]

Quant finance nerd discusses his investment models.

Warning to the uninitiated: this would be difficult to follow without a finance background.

[Ingus · Rating 4 out of 5]

Useful.

[PF Chang · Rating 3 out of 5]

Some sound advice, but overall very old school and model student sort of author.

[Miguel Couto · Rating 3 out of 5]

The book is good. It addresses the heavy work of testing and verification of many possible premium results. It is very readable. What it lacks in my opinion is the same effort regarding the asset allocations proposed at the end of the book. It exceeds in singular testing and lacks in combined allocations verification.

[Ray · Rating 4 out of 5]

Good Book - not for the layman

I’ve spent nearly 30 years as a professional investor in private equity, in other words far removed from the highly quantitative and top down approach of asset allocation/ portfolio construction.
I found the book to be very technical, and often incomprehensible were it not for the useful chapter summaries which condensed the key concepts and takeaways into ‘English’.
My key takeaway from reading this is that like many aspects of investing and despite the immense quantitative firepower and academic effort dedicated to this space over many decades, subjective judgement and a good dose of luck remain a key factor to success.
Readers with strong quantitative finance background or CFA will benefit most from this book.

[Attila Rebak · Rating 5 out of 5]

I just published a new post on Beyond Diversification by Sébastien Page—an innovative, balanced take on portfolio construction and real-world risk management. If you’re interested in evidence-based investing, you may enjoy my review: https://attilarebak.substack.com/p/be...

[Importance Sampling · Rating 5 out of 5]

Fantastic book. This really brought together multi-asset investing for me. The breadth of content from expected return frameworks to how to think about scenario analysis makes for a very practical book.