CFA Level I · CFA Level I Exam · Basics of Portfolio Planning and Construction
In portfolio planning, the strategic asset allocation (SAA) is best described as:
Strategic asset allocation is a set of long-term target weights across asset classes, derived from the investor's return objectives, risk tolerance and constraints. It differs from tactical allocation, which makes temporary deviations from those targets to exploit short-term views on market mispricing.
- Aa set of target weights for asset classes based on long-term objectives and constraintsCorrect
- Ba short-term shift in weights to exploit perceived mispricing
- Ca rule that sells winners and buys losers after each market move
Explanation
SAA sets long-run target weights for asset classes derived from the investor's objectives, constraints and long-term capital market expectations. Short-term deviations to exploit mispricing describe tactical asset allocation, not strategic allocation.
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