Introduction to Asset Allocation

This is the first of the three foundational chapters of the book. We start off by defining asset allocation and asset classes in Sect. 1.1. We then move on to examine the asset allocation process in Sect. 1.2, the division between strategic asset allocation (SAA) and tactical asset allocation (TAA) in Sect. 1.3, and the investment process in Sect. 1.4. We finish with an analysis of rebalancing strategies and their implications in Sect. 1.5.