Strategic versus tactical asset allocation
Keep tactical portfolio at 20-25%, based on product availability and lock-in period
As an investor, you are focused on one thing–optimizing your risk-adjusted returns over the course of the investment tenure. How do you make this objective a reality? The first thing to remember is that, while higher risk correlates to higher potential for returns, a healthy portfolio must have a combination of risk and security. This is where asset allocation comes into play. When you divide your portfolio into different asset classes with a low correlation, you will end up earning optimal returns from each category, while also limiting loss.