Which of the following best describes the primary goal of a strategic asset allocation approach?

Question: Which of the following best describes the primary goal of a strategic asset allocation approach?

Answer options: ✅ To maintain a long-term target mix of assets based on an investor's risk tolerance and objectives.

• To exploit short-term market inefficiencies by shifting asset weights opportunistically.
• To frequently rebalance the portfolio to capture momentum in specific sectors.
• To focus solely on maximizing current income regardless of long-term growth prospects.

Correct answer: To maintain a long-term target mix of assets based on an investor's risk tolerance and objectives.

Explanation: Strategic asset allocation involves establishing a long-term target asset mix that aligns with the investor's objectives, risk tolerance, and time horizon. It is a passive approach primarily focused on the investor's individual circumstances.