Get Aggressive Asset Allocation Conservative Asset Allocation

Investing for beginners tip: A conservative portfolio is ensuring steady growth while aggressive strategy looks for faster gains.

Understanding Aggressive Investment Strategy For example, Portfolio A which has an asset allocation of 75% equities, 15% fixed income, and 10% commodities would be considered quite aggressive, since 85% of the portfolio is weighted to equities and commodities.

The ClearBridge Aggressive Growth Fund (Ticker: SHRAX) is one example of an aggressive growth fund available for both retail and institutional investors. As of March 2022, the Fund holds $5.7 billion in assets and had a year-to-date return of -8.7% versus a return of -9.25% for its benchmark Russell 3000 Growth Index.

A standard example of an aggressive strategy compared to a conservative strategy would be the 80/20 portfolio compared to a 60/40 portfolio. An 80/20 portfolio allocates 80% of the wealth to equities and 20% to bonds compared to a 60/40 portfolio, which allocates 60% and 40%, respectively.

While being more aggressive can make a lot of sense if you have a long time until retirement, it can really sink you financially if you need the money in less than five years. To reduce risk, investors can add more bond funds to their portfolio or even hold some CDs.

Approaches to liability-relative asset allocation include surplus optimization, a hedging/return-seeking portfolios approach, and an integrated asset–liability approach. Surplus optimization involves MVO applied to surplus returns. A hedging/return-seeking portfolios approach assigns assets to one of two portfolios.

The conservative allocation is composed of 15% large-cap stocks, 5% international stocks, 50% bonds and 30% cash investments.