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asset allocation

Behavioral Biases in Asset Allocation

September 1, 2020August 14, 2020 by CFA Study Guide
Cfa portfolio management

Loss aversion is a bias in which investors dislike losses more than they like gains. This makes it difficult for investors …

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Adjusting Strategic Asset Allocation

August 14, 2020 by CFA Study Guide
Cfa portfolio management

It is unlikely that the initial optimal asset allocation will be applicable for the entire lifetime of any portfolio. In …

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Asset Allocation for Taxable Investor

August 14, 2020 by CFA Study Guide
Cfa portfolio management

In the presence of taxation, pretax, after-tax risk, and return characteristics may be significantly different. For this reason, taxable entities …

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Constraints in Asset Allocation

September 16, 2020August 14, 2020 by CFA Study Guide
Cfa portfolio management

An asset owner must consider a number of constraints when modeling and choosing among asset allocation alternatives. Some of the …

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Goals-Based and Miscellaneous Approaches

April 7, 2021August 14, 2020 by CFA Study Guide
Cfa portfolio management

The goals-based approach to asset allocation is useful for individual investors, who typically have a number of (sometimes conflicting) objectives, with different …

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Liability Relative Asset Allocations

August 14, 2020 by CFA Study Guide
Cfa portfolio management

Liability-relative asset allocation is aimed at the general issue of rendering decisions about asset allocation in conjunction with the investor’s …

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Factor Based Asset Allocation

August 14, 2020 by CFA Study Guide
Cfa portfolio management

An alternative approach used by some practitioners is to move away from an opportunity set of asset classes to an opportunity set …

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Risk Budgeting Approach

August 14, 2020 by CFA Study Guide
Cfa portfolio management

There are three aspects to risk budgeting: The risk budget identifies the total amount of risk and allocates the risk …

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Monte Carlo Simulations and Addressing Criticisms of MVO

October 1, 2020August 14, 2020 by CFA Study Guide
Cfa portfolio management

Monte Carlo Simulation Monte Carlo simulation complements MVO by addressing the limitations of MVO as a single-period framework. In the …

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Mean Variance Optimization

August 14, 2020August 14, 2020 by CFA Study Guide
Cfa portfolio management

Mean-variance optimization (MVO) is the most common approach to asset allocation. It assumes investors are risk averse, so they prefer more …

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