Money Management and Manager Selection Process
Asset allocation is the process of combining asset classes—such as stocks, bonds, and cash—to help meet your goals.
Cetera Investment Management takes a dual approach:
- Strategic asset allocation is the process of determining target long-term allocations to the asset classes that present an optimal mix of risk and return over a long-term time horizon. Over time, studies have shown that strategic asset allocation is the most important determinant of the total return of a broadly diversified portfolio with limited market timing.
- Tactical asset allocation is a dynamic strategy that actively adjusts a portfolio’s strategic asset allocation based on short-term market forecasts, usually looking forward one to four quarters. The strategy attempts to systematically exploit inefficiencies across asset classes.
In the following, we discuss our underlying philosophy behind these two strategies and how they come to life, so that you can feel more confident in your portfolio options. While some of this process document may be technical in nature, we want to provide you with the most transparent explanation of how we construct models. When we implement an asset allocation or mutual fund change, we’ll always highlight the rationale behind these changes.