Asset allocation

The investment process has three stages – Strategic asset allocation, Tactical asset allocation and Fund selection.

Strategic Asset Allocation (SAA) is the blend of asset classes needed to produce the best risk-adjusted returns for a particular level of risk in the long term before taking into account current market events. As different asset classes have different risk/return characteristics, getting it right is fundamental to determining the behaviour of the portfolio and its expected long-term performance, thereby ensuring that you are on the right path to meet your investment objectives.

Tactical Asset Allocation (TAA) is how we express our view of current market conditions in the shorter term, either to take advantage of opportunities or to avoid risks. We invest more into asset classes which we see as more attractive and less in others, positions known as ‘overweight’ and ‘underweight’ respectively. However, any changes are made with your risk tolerance in mind and within clearly defined parameters.

Fund selection is where we select the investment funds within each asset class that we believe will produce strong risk-adjusted returns.