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Strategic asset allocation is a portfolio strategy that involves setting target allocations for various asset classes, then yearly rebalancing the portfolio to maintain these original allocations. Allocations can deviate due to differing returns from various assets. Balanced diversification can reduce risk and improve portfolio returns.

Strategic asset allocation is an investment strategy focused on the needs of the investor rather than the constant tracking of the markets, and is thought to remove the influence of emotion from investment strategies.

 

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