Overview of Asset Allocation

Free CFA Level III: Private Markets lesson in Asset Allocation. 32 min read, ~4,862 words.

Asset allocation explains 90%+ of return variability across portfolios over the long run. Asset-only (MVO) ignores liabilities; surplus optimization, hedging/return-seeking, and integrated ALM incorporate them via the liability. MVO requires n expected returns, n standard deviations, and n(n-1)/2 correlations as inputs. Risk concept varies by approach: total volatility (asset-only), surplus...

What this lesson covers

• Content
• Example 1
• Example 2
• Common Mistakes
• Check Your Understanding
• Exam Shortcuts

Learning objectives

• overview

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