Understanding Strategic Asset Allocation

Easy Asset Allocation Strategic Asset Allocation

Alex is a financial advisor who is tasked with developing a strategic asset allocation plan for a client who is 40 years old, intends to retire at age 65, and has a moderate risk tolerance. The client aims for a balanced growth investment strategy that combines both equities and fixed income instruments.

Alex considers a few asset allocation strategies and is trying to determine the best approach to optimize the client’s long-term portfolio. Which of the following statements best describes the concept of strategic asset allocation that Alex should convey to his client?

Strategic asset allocation involves a dynamic approach, where asset weights are actively adjusted based on current market conditions.

Strategic asset allocation refers to a fixed investment strategy where the investor keeps the asset allocation constant over time.

Strategic asset allocation is a long-term investment strategy that is periodically reviewed and rebalanced based on the investor's risk tolerance and investment horizon.

Hint

Submitted8.2K

Correct7.1K

% Correct86%