Please enable JavaScript.
Coggle requires JavaScript to display documents.
Asset allocation (Strategic decisons (How much interest rate risk does one…
Asset allocation
-
Forms
Strategic asset allocation, asset mix with optimal balance between expected risk and return, long-term
Tactical asset allocation: more active approach, tries to position portfolio into assets, sectors or individual stocks which show most potential for gains
Core-Satellite asset allocation, hybrid of strategic and tactial allocations
Systematic asset allocation, three assumptions, markets provide explicit information of returns, relative expected returns reflect consensus, expected returns provide clues to actual returns
Style asset allocation, different investment styles having different risk and return profile
Tactical asset allocation active form, over/underweight asset classes based on analytical assessment
Start with base allocation, but with range of for example 10/20 percent
-
-
-
Asset allocation based on principle that different assets perform differently in different markt and economic conditions
Diversification reduces the overall risk in terms of the variability of returns for a given level of expected return
-
So, one of the weak links, no guarantee that past relationships will exist in the future
Deciding factors
-
(sub) asset classes and expected returns, volatilities and correlations
-
-
Investment strategy to balance risk versus reward by adjusting the percentage of each asset according to investors risk tolerance, goals and investment time frame