- Tactical asset allocation differs from strategic asset allocation:
- In that it provides the overall framework for implementation pursuant to the IPS.
- In that it involves shifts in the overall allocation, but only within the context of the strategic allocation in an effort to exploit short term market inefficiencies.
- May impact return.
- Both b. and c.
- Risks of rebalancing include all of the following:
- Additional transaction costs.
- Added tax liability.
- The consistent application of the client's strategic asset allocation.
- All of the foregoing.
- Hedging and monetization strategies include all of the following, EXCEPT:
- Use of variable prepaid forwards.
- Gradual sale of shares over time.
- Use of a separate account for increase diversification.
- Exchange traded fund.
- Strategic asset allocation may be implemented through any of the following means, except:
- Index funds.
- Separate account managers.
- Tax deferred retirement accounts.
- Core plus approach.
- The risks of not addressing low basis stock include:
- Severe tax liability.
- Heightened volatility due to lack of diversification.
- Effective risk-management.
- Both a. and b.
Review Questions 17 - 22
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InvestingAn asset mix should reflect an investor’s current goals. Here are a few strategies for establishing the right allocation.
Financial AdvisorThe asset allocations of Baby Boomers’ 401(k)s are dangerously out of balance. Here's how to remedy that.