5 smart things to know about Strategic Asset Allocation

Posted by: Labdhi Mehta on Jun 12, 2017, 06.30 AM IST

1. SAA is a portfolio building method which is completely aligned to investor objectives (return) and constraints (risk).

2. SAA involves detailed assessment of an investor's goals and their preferences toward risk through discussions and questionnaires.

3. It is usually implemented by determining the risk and return profile of the investor and assigning a model portfolio that reflects their preferences.

4. SAA involves periodic rebalancing resulting either from the shift in allocations due to performance of asset classes over time or change in investor needs leading to changes in desired allocation.

5. Asset class selection does not take into account any positive or negative views of asset class performance in the near future.

(The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta) This article appeared in Economic Times dated Jun 12, 2017, 06.30 AM IST