Summary
- Well-optimized portfolios can result in a better fit for investors’ goals.
- Portfolios that only shift the allocation of stocks vs. bonds don’t customize the underlying holdings to address investor risk and return preferences.
- At New Frontier, each portfolio on the efficient frontier is a unique solution – optimized to achieve its own investment objective, not a scaled version of another.
Uncorrelated returns reflect customized optimization
New Frontier’s conservative and aggressive portfolios sometimes move in different directions. This contrasts to traditional portfolios, where different risk targets within a strategy move in the same direction, just more or less. However, the difference highlights a feature of properly-optimized portfolios – conservative and aggressive portfolios should perform differently because they’re made for different investment goals.
Allocations are optimized independently
The holdings in an optimized conservative portfolio differ from a scaled-down version of its aggressive counterpart. This is a feature of properly-optimized portfolios – the efficient frontier famously curves because every point on it represents a uniquely optimized combination of assets. Therefore, our portfolios are designed to have different risk exposures, not just different risk amounts, and will react differently to economic news. The results are a better fit for investor goals.
The Proof is in the Performance
The chart below plots the daily returns YTD of our aggressive 90/10 portfolio (Y-axis) against our conservative 20/80 portfolio (X-axis). The orange line shows how returns would behave if both portfolios were simply scaled versions of the same index. In this case, daily returns from the ACWI adjusted to represent 90% and 20% equity exposure. The purple dots represent the realized returns of the optimized New Frontier portfolios. These deviate from the orange line, highlighting their different reactions to markets – observations in the top-left and bottom-right quadrants are examples where the two portfolios moved in opposite directions.
Notably, on days with negative returns for the market (the left half of the chart), the purple dots overwhelmingly lie above the orange line, indicating that the 20/80 conservative portfolio lost less than the simple ACWI blend, making it a better fit for conservative investors.
New Frontier Portfolios Do Not Move in Sync
YTD Daily Portfolio Returns as of 10/31/25 
In Conclusion
At New Frontier, our conservative and aggressive portfolios sometimes move in different directions – and that’s not a mistake, it’s design.
Our conservative portfolio isn’t just a dampened version of an aggressive one. Each portfolio is independently optimized to achieve a distinct investment goal, with its own mix of risks and exposures. That’s why well-constructed portfolios often react differently to market shifts – and why that difference can better serve investors’ objectives.
Link to Author Bio
Robert Michaud