What is a Target Allocation and how is it selected?

A Target Allocation is a high level asset allocation we believe represents an appropriate mid to long term strategy for your investments. It is driven by the profile questions you have answered and data from your financial dashboard. Your Target Allocation seeks to find the right balance between your need, desire and ability to take risk. We attempt to estimate what your cash flow needs will be in retirement.

The first priority is maintaining your lifestyle in retirement, and a second priority is absolute growth.

If you have several years of working and saving until expected retirement, a growth oriented portfolio is usually recommended to allow for a stronger position entering retirement. If you are close to or in retirement, allocations are fine-tuned to minimize the odds of running out of money. In all cases, your stated risk tolerance is an important factor, but is only one of several considered.

Target Allocations take advantage of all available liquid asset classes and are optimized in order to seek the maximum benefits of global diversification. Target Allocations are designed to be close to the efficient frontier based on historical results, but are practical applications of Modern Portfolio Theory and are therefore not exactly on the efficient frontier. 

Have more questions? Please Sign In to submit a request
Was this article helpful?
6 out of 6 found this helpful