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Guide to portfolio construction: The role of strategic asset allocation

Discover how the strategic use of asset allocation can help improve portfolio performance and help you achieve your ambitions.

Apr. 30, 2022 8-minute read

Key takeaways from this guide to portfolio construction:

Strategic asset allocation is based on the idea that broad diversification improves a portfolio’s risk and return profile—in other words, if you diversify you aim to take less risk and still achieve your targeted return. Each portfolio combination of stocks, bonds and cash provides different expected performance outcomes. By examining the correlation of returns between these asset classes, you can construct a portfolio that maximizes your returns while respecting your objectives and constraints.

Explore our six-step strategic asset allocation process in the full report:

Determine investment objectives and profile
Forecast long-term returns for different asset classes
Model and calculate optimal asset allocation
Select managers
Examine risk exposure and estimate drawdowns during crises
Monitor regularly and rebalance when necessary

Read the full report (PDF, 850 KB) Opens in a new window.

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Guide to portfolio construction: The role of strategic asset allocation

Key takeaways from this guide to portfolio construction:

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