Dynamic Asset Allocation

Markets aren't always fair. With Mercer's Dynamic Asset Allocation service, investors can make the most of this fact.

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Strategic asset allocation has traditionally been based on an assumption of long-term market equilibrium, but in practice, markets rarely reflect “fair value”. Mercer’s Dynamic Asset Allocation (DAA) service exploits these deviations from long-term averages, to deliver improved returns and sound risk management.

Mercer’s DAA service bridges the gap between long-term strategic asset allocation and the shorter-term horizons used by active investment managers. Based on a consistent, rigorous process, DAA capitalises on the potential of the medium-term, without compromising the overall investment objectives of a portfolio.

While tactical asset allocation predicts the movements of investment markets over very short-term periods, DAA, by contrast, adjusts or “tilts” strategic asset allocations in the medium term, to improve a portfolio’s overall risk/return characteristics. This timeframe recognises that market dislocations and mispricings can persist for several years, a time horizon that many active fund managers struggle to exploit.

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