asset-allocation

Purpose Provides frameworks for determining how to distribute capital across asset classes and strategies. Covers strategic and tactical allocation, mean-variance optimization, Black-Litterman, risk parity, glide paths, and practical implementation approaches. Asset allocation is the primary driver of long-term portfolio performance and risk.

The long-term policy portfolio based on an investor's risk tolerance, return objectives, time horizon, and constraints. SAA determines the baseline target weights (e.g., 60% equity / 30% bonds / 10% alternatives) and is the dominant driver of long-term portfolio returns. SAA should be revisited when investor circumstances change, not in response to market movements.

Tactical Asset Allocation (TAA) Short-to-medium-term deviations from the SAA based on market views, valuations, or momentum signals. TAA requires a disciplined process to avoid becoming ad hoc market timing. Key considerations: