________ portfolio construction starts with asset allocation.

Question

Quizplus · Accepted Answer

Top-down portfolio construction starts with defining the investment goals and objectives, followed by asset allocation, and then selecting individual securities or funds to fit within the asset allocation framework. This approach first considers the big picture, such as the investor's risk tolerance, return objectives, and market conditions, before making investment decisions. Bottom-up portfolio construction, on the other hand, starts with selecting individual securities based on their fundamental analysis and potential to outperform the market.

________ Portfolio Construction Starts with Asset Allocation