Which of the following is typically a characteristic of a strategic asset allocation approach?

Question: Which of the following is typically a characteristic of a strategic asset allocation approach?

Answer options:

• Frequent and significant shifts in asset weights based on market forecasts. ✅ Establishing long-term target asset weights and periodically rebalancing.
• Focusing solely on minimizing transaction costs.
• Attempting to time market movements for short-term gains.

Correct answer: Establishing long-term target asset weights and periodically rebalancing.

Explanation: Strategic asset allocation involves setting long-term target asset weights based on a client's objectives and risk, and then rebalancing periodically to maintain those targets, rather than making frequent tactical shifts.