What is Dynamic Asset Allocation Strategy?
Dynamic asset allocation is a highly active portfolio management strategy, which involves constant/frequent adjustment of investments with respect to market and instrument performances. Unlike strategic and tactical asset allocation strategies, dynamic asset allocation does not include any fixed investment ratio among investments.
Investors following dynamic asset allocation only look for more profitable instruments with respect to current market direction and performance. They diversify their investments on different financial instruments like equities, derivatives, mutual funds, index funds, fixed income securities, money market funds, etc. They constantly buy instruments which are rising and sell instruments which are losing. Investors and Traders following dynamic asset allocation strategy use fundamental and technical analysis tools to evaluate, confirm and predict trends of markets and instruments.
Advantages of dynamic asset allocation include (1) increased returns as more investments are done in rising instruments, (2) Reduced downside risk as investments are avoid on declining markets, (3) better exploitation of changing economic scenarios, and (4) benefit of diversification of investments. Disadvantages include (1) The need of active management of portfolio, (2) chance of loss because of wrong market interpretation and wrong investing decisions, and (3) high risk when compared to strategic and tactical methods.
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Investors following dynamic asset allocation only look for more profitable instruments with respect to current market direction and performance. They diversify their investments on different financial instruments like equities, derivatives, mutual funds, index funds, fixed income securities, money market funds, etc. They constantly buy instruments which are rising and sell instruments which are losing. Investors and Traders following dynamic asset allocation strategy use fundamental and technical analysis tools to evaluate, confirm and predict trends of markets and instruments.
Advantages of dynamic asset allocation include (1) increased returns as more investments are done in rising instruments, (2) Reduced downside risk as investments are avoid on declining markets, (3) better exploitation of changing economic scenarios, and (4) benefit of diversification of investments. Disadvantages include (1) The need of active management of portfolio, (2) chance of loss because of wrong market interpretation and wrong investing decisions, and (3) high risk when compared to strategic and tactical methods.
NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage
posted by NobleTrading at
1:28 PM
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