ACTIVE ASSET ALLOCATION

Active asset allocation would be of importance to the investor with respect to decisions regarding where exactly to deploy his resources and in what proportion.

Active asset allocation has attracted a lot of interest from investors in recent times. But asset allocation also means different things to different people; therefore it would be appropriate to define the use and application of various terms in this regard. While, long term asset allocation would establish a policy mix consistent with the long term portfolio objectives; tactical asset allocation would add value while opportunistically responding to changing patterns of risk and reward, which would enable a buy low, sell high stance on the part of the investor; and portfolio insurance would of course protect against unexpected performance while allowing a sell low, buy high on the part of the investor.

While explaining this concept, we shall be covering the following aspects: