Strategic Assets Allocation and Long-Term Investment Management by Institutional Investors

The strategic asset allocation is a key pillar for the long-term investors who face the necessity to reconcile the long-term risk-return objectives and the need for short-term protection. This article explains why the long-term investors have to go beyond the standard asset management framework of fixed weights allocation. Rooted in the financial theory, dynamic asset allocation appears to be a very relevant investment solution. The different types of dynamic strategies are presented and the concept of diagram payoff is introduced as a powerful tool to reveal investor’s preferences. We also illustrate the role of accounting rules and the setup of a proper governance to reach the long term objectives.