Strategies
Chapters in this video
- 0:00 Asset allocation as the single most important decision
- 0:37 Strategic asset allocation and the thermostat analogy
- 2:25 Style drift and rebalancing triggers
- 3:35 Rebalancing mechanics: buy low, sell high
- 4:09 Tactical asset allocation: short-term market deviations
- 5:13 Strategic versus tactical side-by-side comparison
- 5:44 Rapid-fire exam recap
What this video covers
- What strategic asset allocation actually is: the long-term policy portfolio driven by client objectives, risk tolerance, and time horizon
- Why strategic allocation changes only when fundamental client circumstances change (retirement, major life events), not when markets move
- How rebalancing restores strategic targets after market drift, and the two trigger types (calendar-based versus threshold-based)
- Why rebalancing mechanically enforces buy low, sell high discipline by selling overweight winners and buying underweight losers
- What style drift is, why it violates the client's original risk profile, and why the exam tests it as a reason to monitor and rebalance
- What tactical asset allocation is: short-term deviations to exploit market opportunities, always returning to strategic targets afterward
- How to instantly distinguish strategic versus tactical on exam day by asking whether the trigger is client-driven or market-driven
Read the full lesson, free
This video's complete written lesson is free to read in the CertFuel app, no signup wall. The complete Series 65 course also includes adaptive practice questions and spaced-repetition flashcards, free through December 31, 2026.