Building a portfolio
Strategic asset allocation
The long-term target mix you intend to hold through cycles, set from your goals rather than from market views.
How it works
The strategic allocation is the anchor. It is derived from your horizon, your need for the money, and how much decline you can tolerate — not from what looks attractive this quarter.
Its value comes from being decided in advance and written down. A target set calmly is what gives you something to rebalance towards when markets make every choice feel urgent.
Related terms
- Asset allocationHow you divide money between asset classes — the decision that drives most of your long-run experience.
- Tactical asset allocationDeliberately moving away from your long-term target to reflect a shorter-term view.
- RebalancingSelling what has grown and buying what has lagged, to return the portfolio to its target mix.
- Investment policy statementA written document setting out what you are investing for, how, and what would make you change.
More in Building a portfolio
- Sequence-of-returns risk
- Safe withdrawal rate
- Concentration risk
- Risk tolerance
- Core and satellite
- Rebalancing band
- Correlation
- Covariance
All 20 Building a portfolio terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.