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By Christine Benz | 11-16-2010 05:28 PM

Toolkit of a Global Go-Anywhere Portfolio

Morningstar Investment Services' Marta Norton on the case for and allocations behind the team's global portfolio.

Christine Benz: Hi, I'm Christine Benz for

Its International Week on, so we thought it would be helpful to sit down and talk about how Morningstar's Investment Services team puts together its global allocation portfolio.

Here to discuss that is Marta Norton; she is an investment manager with Morningstar Investment Services. Marta, thanks so much for being here.

Marta Norton: My pleasure.

Benz: So you help run this global allocation portfolio. I want to talk first about what is the case for putting together a "go anywhere" global allocation portfolio like this one?

Norton: Well, the reasons most often cited in the marketplace and the reasons that make a lot of sense is really the diversification that you get when you have another country in the portfolio, and the fact that you're really widening your opportunities set. You have great companies that aren't listed necessarily in the U.S. and maybe in Europe or other places people traditionally seek. So this portfolio allows you to access those companies.

But going beyond that, when we were putting together this portfolio, we were really thinking how we individually think about managing money, and it really isn't to target a specific corner of the style box or manage to a benchmark. It's much more absolute; we want a compound wealth, and we thought having a portfolio where we could really go anywhere would help do that. Because we wouldn't be tied to, maybe, say, large-cap equity, when large-cap equity is out of favor.

Benz: So, the baseline asset allocation is 60-40 stock-bond. But you really do have a lot of leeway. You can take your stock position anywhere from 20% to 80%, and do the same with the fixed-income allocation. So it does have a tactical element.

Let's talk about how you adjust tactically, and also I am curious to get your take on the evidence about tactical investing and why you think that tactical is the way to go with at least a portion of this portfolio?

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