What Is Assets Allocation All About?

Thu, Oct 30, 2008


It is COMMON in the finance world for us to hear these jargons like “assets allocation“, “rebalancing” etc2…

In this post, I will like to share with you 2 COMMON approaches, financial planners use to allocate assets of our clients efficiently and effectively.

1) Strategic Assets Allocation

Example: If my client get NTUC Income flexilink policy, and invest 60%  equities and 40%  bonds in his investment portfolio.

Assuming that because of economic downturn, his equities allocation subsequently reduced to 50%. If I were to adopt the strategic assets allocation method, I will seek my client to buy additional 10% equities to rebalanced his portfolio.

2) Tactical Assets Allocation

Meanwhile a financial planner who adopt the tactical assets allocation, will employ, market prediction, timing, to change the asset mix in his client’s portfolio.

Example, through research, the financial planner can deduce that market is now LOW, and investment in equities can generate better returns for client in the long run,he decreases the weightage of bonds and increase weightage on equities, that financial planner is employing tactical assets allocation.

Unlike strategic allocator, a tactical asset allocator has no permanently defined percentage allocation to adhere to. The tactical asset allocator changes asset class weighting based on market predictions.

Yup…That is what “assets allocation” is all about! 🙂


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This post was written by:

- who has written 440 posts on The Official Helmi Hakim Website.

A certified financial consultant, Helmi Hakim has won praise for his patience, perseverance and practicality when solving his clients' financial concerns. For more information on how you can manage your finances better, contact Helmi Hakim at 96520134.

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