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Patrick Bourbon

Patrick Bourbon, CFA

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Ivan Leveille Nizerolle, CFA

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It is with warmth and sincere gratitude from all the BFM team, that we thank you for your ongoing support and we wish you a Happy and Fulfilling New Year with plenty of success for 2016.
To have a great start, we have created a NEW WEBSITE!

To help you make better financial decisions this year, you can also find more than 500 educational charts/articles/videos in our new blog and our social media sites:
The BFM Team

Why Investing in a Fund with Negative Performance and Higher Volatility/Risk Could Be a Good Idea!

At BFM, we not only add value to our clients by helping them choose better funds with lower expenses and tax treatment, but also by improving their portfolio construction.
Sometimes, when we build portfolios for our clients, we recommend adding a new fund for diversification purposes. In the two examples below, we show that investing in a fund with a negative performance and higher risk / volatility could benefit the portfolio by increasing the performance and reducing the risk / volatility!

Example 1
Let's assume an old portfolio with Fund A (60% of the portfolio) and Fund B (40% of the portfolio) that have a 0.2% and 3.7% performance respectively over a 3-year period.
As you can see, by adding Fund C (10% of the portfolio) with a negative performance (-3.5%), the new portfolio has now a 0.9% better performance (from 1.6% to 2.5%)!

Example 2

When adding a new (more volatile / riskier) Fund B in a portfolio, the new portfolio volatility is now 8.9%... lower than the volatility of each Fund A and Fund B of 10% and 20%.

The volatility is lower because the new Fund B returns are uncorrelated.

Here are more details about the calculation.   

Conclusion: Remember to Check the Correlations of the Assets in Your Portfolios

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We invite you to set up a complimentary meeting with the team at Bourbon Financial Management. We would love to get to know you better, your lifestyle, share with you how we help our clients, and also show you how we can be a valuable resource to achieve your financial goals. Understanding and developing long lasting relationships with our clients is a critical component in our process. We look forward to meeting you!  



What type of clients do we have? Our clients are located across the globe including North America, Europe and Asia. We have an unbiased approach in selecting our clientele i.e. our client base is broad encompassing expatriates, executives, entrepreneurs, working professionals, and business individuals. We welcome all clients from individuals with wealthy multi-million dollar portfolios to individuals who currently have negative net worth. 

We have no portfolio size minimums.

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This newsletter is not investment advice or trade recommendations. Many factors beyond those discussed in this newsletter exist in determining a proper investment allocation and whether global investing is appropriate for each individual investor. We welcome all questions and comments regarding investing and retirement concerns.