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Tactical Asset Allocation
Tactical asset allocation (TAA) is a dynamic investment strategy that actively adjusts a portfolio's asset allocation. The goal of a TAA strategy is to improve the risk-adjusted returns of passive management investing. Strategy descriptions TAA strategies can be either discretionary or systematic. Discretionary In discretionary tactical asset allocation strategies, an investor modifies his asset allocation according to the valuation of the markets in which they are invested. Thus, someone who invested heavily in stocks might reduce their position when they perceive that other securities, such as Bond (finance), bonds, are poised to outperform stocks. Unlike stock picking, in which the investor predicts which individual stocks will perform well, tactical asset allocation involves only judgments of the future return of complete markets or sectors. As such, some practitioners perceive it as a natural supplement to mutual fund investing, including passive management Passive ma ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Portfolio (finance)
In finance, a portfolio is a collection of investments. Definition The term "portfolio" refers to any combination of financial assets such as stocks, bonds and cash. Portfolios may be held by individual investors or managed by financial professionals, hedge funds, banks and other financial institutions. It is a generally accepted principle that a portfolio is designed according to the investor's risk tolerance, time frame and investment objectives. The monetary value of each asset may influence the risk/reward ratio of the portfolio. When determining asset allocation, the aim is to maximise the expected return and minimise the risk. This is an example of a multi-objective optimization problem: many efficient solutions are available and the preferred solution must be selected by considering a tradeoff between risk and return. In particular, a portfolio A is dominated by another portfolio A' if A' has a greater expected gain and a lesser risk than A. If no portfolio dominates A ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Risk Tolerance
Risk appetite is the level of risk that an organization is prepared to accept in pursuit of its objectives, before action is deemed necessary to reduce the risk. It represents a balance between the potential benefits of innovation and the threats that change inevitably brings. This concept helps guide an organization's approach to risk management. Risk appetite factors into an organization's risk criteria, used for risk assessment. Definition ISO 31000 defines risk appetite as the "amount and type of risk that an organization is willing to pursue or retain." Risk appetite is burdened by inconsistent or ambiguous definitions, but rigorous risk management studies have helped remedy the lack of consensus. This remainder of this section compares the standardized definition of risk appetite with other related terms. Risk threshold Since risk appetite can be stratified into levels of risk, risk threshold can be defined as the upper limit of risk appetite. Risk threshold can also be ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |