Asset allocation optimization - laying the foundation for building an effective investment portfolio
We achieve the goal of maximizing returns or minimizing risks through reasonable allocation of assets. The following are some of our common asset allocation optimization methods:
1. Diversified investment
Diversified investment is a method of diversifying risks. By allocating investments among different types of assets, such as stocks, bonds, real estate, commodities, etc., we can reduce the risk of the overall investment portfolio to a certain extent.
2. Risk budget model
The risk budget model is a risk-based asset allocation method that determines the allocation ratio of assets based on the risk level of the assets. The advantage of this method is that it is not sensitive to inputs and can achieve a better benefit-risk ratio.
3. Minimum upper bound maximization method
The minimum upper bound maximization method is an asset allocation method based on uncertainty. It considers various possible investment scenarios to find an investment portfolio that will not exceed a certain preset maximum allowable loss under any circumstances. configuration plan.
4. Asset securitization
Asset securitization is a way to package assets and sell them to investors. In this way, non-current assets can be converted into current assets, thereby improving the efficiency of asset utilization.
5. Allocation according to investment objectives and time period
Reasonably allocate various assets based on your personal investment goals and time horizon. For example, if your goal is long-term wealth accumulation, you may want to invest more in stocks and other high-risk, high-yield assets; if your goal is short-term wealth appreciation, you may want to invest more in bonds and other Low-risk, low-return assets.
The above are just some of our basic asset allocation optimization methods. In fact, asset allocation optimization is a quite complex field and involves many factors, including investors’ risk tolerance, investment goals, investment period, asset price volatility, asset relevance, etc. Therefore, the key to smart asset allocation is building a diversified portfolio to achieve your short- and long-term goals.
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