{"id":25438,"date":"2013-05-16T17:54:12","date_gmt":"2013-05-16T12:24:12","guid":{"rendered":"http:\/\/vskills.in\/certification\/tutorial\/?p=25438"},"modified":"2024-04-12T14:18:12","modified_gmt":"2024-04-12T08:48:12","slug":"asset-allocation-process","status":"publish","type":"page","link":"https:\/\/www.vskills.in\/certification\/tutorial\/asset-allocation-process\/","title":{"rendered":"Asset Allocation Process"},"content":{"rendered":"<p>\u00a0<\/p>\n<h4><strong>Asset Allocation Process<\/strong><\/h4>\n<p>The first step in our Asset Allocation Process is to establish a strategic (long-term) asset allocation for each portfolio. \u00a0We believe that at the core of building a diversified and efficient portfolio is \u00a0 Modern Portfolio Theory (MPT). \u00a0 According to the MPT, it&#8217;s possible to construct an &#8220;efficient frontier&#8221; of optimal portfolios offering the maximum possible expected return for a given level of risk. \u00a0 We utilize the expected return, correlations, and standard deviation of various asset classes to design the most efficient growth and income portfolio.<\/p>\n<h3>Three basic investment types<\/h3>\n<div class=\"apply\">\n<h3>Apply for Portfolio Manager Certification Now!!<\/h3>\n<p><a href=\"http:\/\/www.vskills.in\/certification\/Certified-Portfolio-Manager\">http:\/\/www.vskills.in\/certification\/Certified-Portfolio-Manager<\/a><\/p>\n<ul>\n<li><strong>Cash or Cash Equivalents:<\/strong>\u00a0For an investment to be classified as\u00a0<em>Cash or as Cash Equivalen<\/em>t, the savings are held as a cash balance in an account or it provides a high level of safety for the capital amount, pays a reasonable income while invested, and it can be sold easily at any time or the investment has a very short-term maturity. At maturity, the issuer guarantees to return the investor\u2019s capital upon the maturity date.<\/li>\n<li><strong>Fixed Income:<\/strong>\u00a0For an investment to be categorized as\u00a0<em>Fixed Income<\/em>, the investment should have a set maturity where the investor\u2019s invested capital will be returned to them and the investments should have a set, regular annual income. The investment\u2019s market value is typically influenced by the credit rating of the issuer, the current interest rate environment and the investment&#8217;s liquidity.\u00a0<em>Fixed Income<\/em>\u00a0investments do benefit from the issuer\u2019s profitability or investor\u2019s enthusiasm for the issuer\u2019s industry or sector. In some cases, as with preferred shares, the investment may be missing a maturity date, but its individual features and the market\u2019s valuation of the investment is closer aligned to a\u00a0<em>Fixed Income\u00a0<\/em>investment than it is to a Growth or Cash Equivalent investment. As a result, it is classified as\u00a0<em>Fixed Income<\/em>\u00a0for<em>\u00a0asset allocation<\/em>\u00a0purposes.<\/li>\n<li><strong>Growth:<\/strong>\u00a0For an investment to be categorized as\u00a0<em>Growth<\/em>, the investment will not have a maturity date where the investor\u2019s capital is returned to them. There is no issuer guarantees on the monies invested. The market value of the investment will fluctuate dependent upon the issuer\u2019s profitability, the economic and investment environment and the popularity of the issuer\u2019s industry with investors. The investment will not pay an enforceable income payment to the investor. The investment may or may not pay an annual income, but the payment is at the discretion of the issuer and, as such, the investment\u2019s annual income payments can be increased or decreased at the issuer\u2019s discretion.<\/li>\n<\/ul>\n<\/div>\n\n\n<p><a href=\"https:\/\/www.vskills.in\/certification\/tutorial\/certified-portfolio-manager\/\" target=\"_blank\" rel=\"noreferrer noopener\">Back to Tutorial<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u00a0 Asset Allocation Process The first step in our Asset Allocation Process is to establish a strategic (long-term) asset allocation for each portfolio. \u00a0We believe that at the core of building a diversified and efficient portfolio is \u00a0 Modern Portfolio Theory (MPT). \u00a0 According to the MPT, it&#8217;s possible to construct an &#8220;efficient frontier&#8221; of&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"categories":[2080],"tags":[4763],"class_list":["post-25438","page","type-page","status-publish","hentry","category-portfolio-management","tag-asset-allocation-process"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.5 - 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