Investment and Portfolio Analysis

Asset Allocation - Part 3 (2023)


This eCourse consists of four modules on Asset Allocation. Module 1 describes the purpose of an investment policy statement and the core elements that comprise an IPS, such as provisions related to asset allocation, risk management and reporting, and performance monitoring. It also examines the delineation of duties both between and within investor and client organizations that must be described and specified by an IPS in order to promote accountability and responsibility.

Module 2 focuses on Strategic asset allocation, which refers to the long-term allocation of an investment portfolio to various asset classes based on an investor's goals and tolerance for risk. This module looks at the strategic asset allocation decision, which is generally recognized as the most important decision in the investment process and the key determinant of portfolio performance. It describes in detail how investors can rebalance their portfolio and the various considerations around such rebalancing.

Module 3 covers Tactical Asset Allocation, which is a dynamic investment strategy that involves deviating from a portfolio's strategic asset allocation (long-term asset mix) to exploit short-term opportunities for generating excess return (alpha). This module describes the basics of TAA, including the elements required to build a reliable and durable forecasting model on which tactical decisions may be based and the market/economic signals that indicate when such decisions should be triggered.

Module 4 explores the use of various asset allocation concepts in practice. You will observe a situation where a portfolio manager in New York rebalances his portfolio on the back of market volatility that causes the portfolio’s strategic asset allocations to drift away from their target.


On completion of this course, you will be able to:
- Recognise the purpose of investment policy statements in both an institutional and retail context
- Identify the key elements of a typical investment policy statement
- Recognise the importance of strategic asset allocation (SAA) in the investment process
- Identify the various approaches to rebalancing a portfolio and the considerations that influence rebalancing
- List some of the methods used to evaluate SAA
- Define tactical asset allocation (TAA) in the broader context of asset allocation and portfolio construction
- Recognise the key objectives of TAA and some of the tools used in the pursuit of these objectives
- List some of the techniques that can be used to evaluate the success or otherwise of a TAA strategy


Module 1: Investment Policy Statements
Topic 1: Overview of Investment Policy Statements
Topic 2: Key Elements of Investment Policy Statements

Module 2: Strategic Asset Allocation (SAA)
Topic 1: SAA Overview
Topic 2: Portfolio Rebalancing
Topic 3 Evaluating SAS

Module 3: Tactical Asset Allocation (TAA)
Topic 1: Overview of TAA
Topic 2: Key Objectives & Tools of TAA
Topic 3: Evaluating SAA

Module 4: Asset Allocation - Scenario


Relevant Subject
Type 9 - Asset management
SFC:2.50, PWMA:2.50
Staff of Corporate Member: HK$800
Non-Member: HK$1200
All Member: HK$800