Recommendations & StrategiesQuestion 46 of 110
A strategic asset allocation approach is best described as which of the following?
a.Frequent short-term trading to exploit market timing
b.Concentrating in whichever sector performed best last year
c.Holding only cash until markets are clearly rising
d.Setting long-term target weights across asset classes and rebalancing to them
Explanation
Strategic asset allocation establishes long-term target percentages for asset classes based on the investor's goals and risk tolerance, then periodically rebalances back to those targets. It is a disciplined, long-horizon approach. Tactical allocation, by contrast, makes shorter-term shifts to exploit perceived opportunities.
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