Chapter 14. Every Strategy Has Its Day
A pension consultant’s long-only recommendation is best described as a strategic asset allocation (SAA). The recommendation is a mix of assets based on historical estimates that will, in the long run, meet the desired plan objectives. If everything goes as expected, all a plan administrator has to do is buy the various recommended asset classes or investment buckets. In particular, an administrator only needs to select from the different exchange-traded funds (ETFs) in the recommended proportions or amounts.
One such example is of a domestic equities index in which the large-, mid-, and small-caps are weighted 70 percent, 20 percent, and 10 percent, respectively. Such a strategy’s returns are reported in ...
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