Understanding Strategic Asset Allocation

Very Easy Asset Allocation Strategic Asset Allocation

John is a financial advisor working with a client who is approaching retirement age. He needs to develop a long-term investment strategy that will ensure his client's portfolio maintains a balanced risk-return profile while focusing on the client's objective of steady growth to fund retirement. John decides to adopt a strategic asset allocation approach to achieve this.

Which of the following statements accurately describes the primary goal of strategic asset allocation?

To maximize short-term returns by frequently adjusting the portfolio.

To establish a long-term investment strategy that allocates resources across asset classes based on expected returns and risk.

To invest exclusively in low-risk bonds to preserve capital.

Hint

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