Can someone help me understand portfolio design?
An advisor might recommend a portfolio that's 60% stocks and 40% bonds, let's say.
Then on the risk tolerance questionnaire a client might come out as "moderate," for example. And the model portfolio for that investor might be 5% aggregate bonds, 20% large cap value, 20% large cap growth, 15% mid-cap . . . etc etc. I'm just making up these numbers.
But my question has to do with not understanding how to reconcile a "60/40" stock/bond portfolio with a model asset allocation portfolio that's defined in terms of large cap, mid-cap, small cap, etc. Are these two ways of designing a portfolio supposed to coincide somehow?
What am I missing?