What Is Income Asset Allocation?

Asset Allocation refers to the allocation of investment funds between different asset classes based on investment needs. Usually, assets are allocated between low-risk, low-yield securities and high-risk, high-yield securities.

Asset allocation

Asset allocation is one of the most important links in the investment process, and it is also the decision

Five steps to effective financial management

(I) Influencing investors

1. There are different perceptions and assumptions about investors' risk tolerance and risk appetite.

Compared with the strategic asset allocation process, the tactical asset allocation strategy needs to re-predict the expected return of different asset classes based on changes in actual conditions when dynamically adjusting the asset allocation status, but it does not re-estimate whether investor preferences and risk tolerance are Has changed.

In terms of risk tolerance, tactical asset allocation assumes that investors' risk tolerance will not change with changes in the market and their asset and liability conditions. This type of investor will invest more in risky assets than strategic investors when the return on risk returns is high, so in the long run, he will achieve a greater return on investment.

2. The asset managers have different requirements for their ability to grasp changes in asset investment income.

The risk-return characteristics of tactical asset allocation are closely related to the ability of asset managers to grasp changes in asset class returns. If the asset manager can accurately predict the trend of asset income changes and take timely and effective actions, the use of strategic asset allocation will bring higher returns; but if the asset manager cannot accurately predict the trend of asset income changes, If you can accurately predict but cannot take timely and effective actions, the investment income will be worse than accurately predicting and grasping the market changes, and may even be worse than when you buy and hold the initial often-time portfolio.