Financial Quotient

What is strategic asset allocation?

Strategic asset allocation involves building an investment portfolio by setting target allocations for various asset classes. The portfolio should be re-balanced periodically when the original allocations deviate significantly from their initial settings.

In a portfolio with a strategic asset allocation, the target allocations would differ with individuals based on the investor's risk tolerance, time horizon and investment objectives. The allocations will also change over time as the parameters change.

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A version of this article appeared in the print edition of The Sunday Times on December 09, 2018, with the headline 'What is strategic asset allocation?'. Print Edition | Subscribe