Strategic asset allocation is the first and most important step in systematic and long-term planning of a portfolio. It is about determining the basic risk-return characteristics for a portfolio that comply with the investor’s goals.
Our special report looks at how to determine a combination of liquidity, security and return targets and then select a mix of assets that suits the investor's goals as closely as possible.
As financial markets are subject to changes over time and the investor’s objectives may change as well, the strategic allocation is subject to change over time. It should therefore be reviewed at regular intervals whether the chosen allocation is still appropriate.
Key takeaways:
- The first step to develop an asset allocation for private clients is to get data supplied by the investor, which define the respective investment targets and restrictions for portfolio management.
- A strategic asset allocation is the approach of choice to replicate the defined investment targets and restrictions. Over time, the strategic asset allocation has to be monitored and adjusted according to the investment targets and restrictions.
- The toolkit can be enhanced and further components like tactical asset allocation, stock selection, investment themes or risk overlay can be applied in order to improve portfolio performance.
