A portfolio manager first analyzes a variety of asset mixes to determine an optimal portfolio and then adjusts the mix by monitoring and rebalancing. What is the name for the process the portfolio manager is following?
Strategic asset allocation involves selecting a long-term asset mix, monitoring it, and rebalancing as needed to maintain the desired allocation. The feedback from the document states:
"When a portfolio manager develops a strategy to maximize portfolio returns, he or she does so with a particular asset mix or allocation in mind… This base policy mix is called the strategic asset allocation. This is the long-term mix that will be adhered to by monitoring and, when necessary, rebalancing."
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