Strategic versus tactical

Question 1

3 reasons to use strategic

Answer 1

specified the client’s requirements and risk tolerance there is an ideal asset allocation to which their portfolio should conform.

not possible to ‘time the market’, which means that switches between
asset classes are as likely to incur loss as to generate profit.

For the long term

Question 2

Describe strategic 5

Answer 2

• Fixed weightings/allocation;
• long term;
• with occasional/infrequent rebalancing.
• Little variation from objective.
• No response to market changes.

Question 3

Describe tactical 5

Answer 3

• Varying weightings/allocation;
• short term;
• with frequent rebalancing.
• Substantial variation from objective.
• Take advantage of market changes.