We are not supposed to focus on the economy or the financial market.
Yet, this is one of the most competitive markets in history. Who will emerge as the winner of this market?
In 2008, we saw some big names enter the fray of the financial market. Who were they?
Well, some of them entered as large investment banks and hedge funds.
Some of them entered as exchange traded funds. But one thing that is common among all of these is
that there was a direct correlation of their returns with the performance of the market.
The key to their success was their asset allocation. They were properly allocated to the various asset classes.
They were diversified.

It is just like how a golfer may focus on their swing. Yes, a golfer will focus on the specific mechanics.
But at the end of the day, it is about the quality of their swing. The quality of their swing is of utmost importance.
If they focus on the quality of their swing, they will be able to execute the mechanics flawlessly.
In this market that is so competitive, how should they focus on quality? Well, there are two answers to this question.

Firstly, they should focus on their return on invested capital (ROIC). This is crucial.
There are many funds that are focusing on high ROIC fund. That may be the highest ROIC in the industry.
However, the return that this fund will yield is also very misleading.
In this market that is so competitive, the investment return may be good but its risk is also high.
Its return is the lower of its expense ratio or its risk.
The more you can focus on quality, the lower the risk and the higher the return.

A second way they should focus on quality is the way they do their portfolio management.
They should have a portfolio that is diversified by asset class.
No fund, or person in the industry has a monopoly on getting good return.
It is possible to be interested in quality while being interested in high returns.
To be interested in high returns in a market that is very competitive, you should have a
strategy that is focused on the quality. You should have several funds that are focused on different asset classes.
It is important that you focus on what the fund is focusing on and the sector that
is offering the best return in the industry.So a fund focusing on quality in the market that is very competitive will have multiple
funds focused on different asset classes. They may not all be equity funds. In the market that is very competitive,
you can have funds that are focused on fixed income, money markets, real estate etc.

The impact of diversification

This diversification is important. You should have funds that are focused on different asset classes.
This will create different risk levels in the portfolio. This is very important.
Different risk levels will create different return potential.

If a fund is focusing on quality in the market that is very competitive, each fund will be
focused on different asset classes. This will also generate different risk levels in the portfolio.
Each fund will be investing on different risk levels. The portfolio will be diversified on different levels.
This will ensure that the portfolio will not be concentrated on a small number of sectors that offer the best returns.
It will also reduce volatility. The portfolio will be spread out and each fund will be diversified at multiple levels.

However, if a fund is not focusing on quality in the market that is very competitive,
the portfolio will be concentrated on the same sector. This would ensure that the portfolio would be
concentrated on a small number of sectors that offer the best returns. It will be investing on
a small number of sectors that offers the best returns. For a small fund, the portfolio would be concentrated on
some sectors that are focused on a small number of asset classes. This will result in concentration of returns.

Focusing on quality in the market for fixed income securities has a lot of advantages.
It can increase diversification of returns and reduce volatility. It will spread the portfolio across
different asset classes (i.e. fixed income, fixed interest, equity, money markets etc) that offer varying risk and return profiles.

Having choices

There are many choices that you can make in the fixed income industry.
You can choose between a fixed income fund that invests on the entire market or a focused fixed income fund.
This will determine the investments that you make in the fixed income industry.
It will also allow you to go for different risk levels and return potential.

On the other hand, you can also choose between risk levels. You can go for moderate risk or you can choose high risk.
Risk level is not the only thing that you can choose to select. You can also select different risk level,
return potential and diversity of the portfolio.

In the fixed Income industry, there are different options that you can choose from.
The choice of a fund should not be the only thing that you can choose.
You can also choose to go for different asset classes. You can go for equity, fixed income,
money markets, and even small caps. This will ensure that the portfolio grows in line with the market and diversifies risk.

If you want to take on risk, you can opt for short terms. You can select short term bonds, money market funds, and CDs.

You can also take up risk in the bond market. You can go for long term bond, medium term bond, short term bond, and the entire market.

And lastly, you can also choose for the diversified market portfolio. This will have both long term and short term bonds.
You can have some cash and fixed income securities in the portfolio. And you can take up the cash bond fund,
the fixed income fund, the fixed interest fund, and the equity fund.