Investment Strategies and Asset Allocation Flashcards

What is 'tax-loss harvesting' as a portfolio strategy?

Answer: Selling securities at a loss to offset capital gains and reduce taxes

Tax-loss harvesting sells securities that have declined in value to realize losses that can offset capital gains, reducing current tax liability.

What is 'momentum investing'?

Answer: Buying securities that have recently performed well, expecting continued outperformance

Momentum investing buys securities that have shown recent price strength, based on the tendency of past winners to continue outperforming short-term.

What is 'dividend growth investing'?

Answer: Investing in companies with a history of consistently growing their dividends

Dividend growth investing focuses on companies with strong records of consistently increasing their dividends, combining income with capital appreciation potential.

What is 'portfolio immunization' in bond management?

Answer: Structuring a bond portfolio so its value is protected against interest rate changes

Portfolio immunization matches the duration of bond assets to the investment horizon so that interest rate changes have minimal net impact on the portfolio's value.

What is 'ESG investing'?

Answer: Investing based on Environmental, Social, and Governance criteria

ESG investing incorporates Environmental, Social, and Governance factors alongside financial analysis when making investment decisions.

What is the goal of a 'target-date fund' strategy?

Answer: Automatically adjusting asset allocation to become more conservative as a target date approaches

Target-date funds automatically shift from aggressive to conservative allocations as the target date (typically retirement) approaches, known as a 'glide path.'