Optimum Asset Management has developed a quantitative model, based on various North American economic and financial variables, to determine whether its managers should overweight stocks or bonds. Depending on the conviction derived from the indicators, the model suggests up to four levels of overweighting.
Even though the model plays a significant role in investment decisions, the final decision to overweight or underweight is made by the Asset Allocation Committee at its monthly meetings. The Committee's decisions never run directly counter to what the model suggests but instead add an element of caution. For example, the Committee may reduce the degree to which an asset class is overweighted.