Model portfolios built to generate an expected return. Risk too? Yeah

Comprised of a diverse set of assets constructed to generate an expected return, model portfolios also carry risks, according to

With your financial goals in mind, a host of portfolios are typically offered by financial advisors or investment managers. With these portfolios, investors can take advantage of simple and efficient investment methods with minimal management, the site continues.

True, it seems, the popularity of model wallets is hardly lukewarm. In the landscape of financial product distribution, among advisors, their nascent use has tremendous power, according to

These portfolios, over time, are automatically rebalanced based on changing market conditions or client needs. According to MMI, these models have always been the backbone of the $6.5 trillion consulting solutions industry. More importantly, they have played an important role in mutual fund advisory programs, the site says. This is where discretionary investment management is outsourced by an advisor to an in-house investment committee/research team at a distributor.

Portfolio creation revolves around a plethora of decisions, depending on

Through diversification, a model portfolio positions you to hedge your risk.

In an ideal world, the brains behind wallets are financial advisors. Their role is to supervise the portfolios on a daily basis, allowing you, as a client, to be autonomous.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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