Strategic asset allocation (SAA)

Strategic asset allocation (SAA) sets the target weight and permitted range for each asset class over the long term. It is a policy decision taken by the board or committee. It is reviewed periodically, not in response to daily markets.

An SAA table might read: equities 50% (40% to 60%), bonds 30% (20% to 40%), cash 5% (2% to 10%). Each row limits the share of portfolio value in that class. UK pension statements of investment principles must state policy on the balance between different kinds of investments, which is the SAA.

In Acclimetry, strategic bands are governed rules: approved under maker-checker, versioned and effective-dated. Positions inside the bands are tactical asset allocation, which is the manager’s. A class outside its hard range returns a breach; one past its warning bound but inside the range returns a warning (allocation ranges).