Strategic asset allocation is a portfolio strategy whereby the investor sets target allocations for various asset classes and rebalances the portfolio periodically. The target allocations are based on factors such as the investor's risk tolerance, time horizon, and investment objectives.
How do you choose strategic asset allocation?
Determine Your Allocation
Look at the long-term expected returns and risk level of each asset class when deciding on the target percentage for each class. Stocks are the riskiest, bonds are less risky, and cash is the least risky. The higher the risk, the greater the potential for both growth and loss.
What are the various asset allocation strategies?
Six Asset Allocation Strategies That Work
- Strategic Asset Allocation.
- Constant-Weighting Allocation.
- Tactical Asset Allocation.
- Dynamic Asset Allocation.
- Insured Asset Allocation.
- Integrated Asset Allocation.
- The Bottom Line.
