Investment Strategies and Asset Allocation Flashcards

What is a 'growth investing' strategy focused on?

Answer: Companies expected to grow earnings faster than average

Growth investing targets companies expected to increase earnings significantly above the market average, often at higher valuations.

What characterizes a 'value investing' approach?

Answer: Buying securities believed to be undervalued relative to intrinsic worth

Value investing involves identifying and buying securities trading below their estimated intrinsic value, seeking a margin of safety.

What is an 'income-oriented' investment strategy primarily focused on?

Answer: Generating regular income through dividends and interest payments

Income-oriented strategies prioritize generating regular cash flow through dividends, bond interest, and other yield-producing investments.

What is 'factor investing' (smart beta) based on?

Answer: Targeting specific return-driving characteristics like value, size, or momentum

Factor investing targets specific characteristics (factors) such as value, size, momentum, or quality that have historically delivered excess returns.

What is 'sector rotation' as an investment strategy?

Answer: Shifting investments between sectors based on economic cycle stages

Sector rotation involves moving investments between economic sectors to capitalize on different sectors that outperform at different points in the business cycle.

What is a 'buy-and-hold' investment strategy?

Answer: Purchasing securities and holding them long-term regardless of market fluctuations

Buy-and-hold involves purchasing securities and maintaining them long-term, based on the belief that long-term gains outweigh short-term volatility costs.