Capital Allocation as a Long-Term Discipline

A target allocation is often treated as the end product of a planning exercise — arrive at the right percentages, and the work is largely done. In practice, the percentages are the easy part.

The harder, ongoing discipline is deciding when a portfolio's actual weights have drifted far enough from target to warrant action, and distinguishing that from short-term noise that will resolve on its own.

Allocation is a process, not a document

Treated as a living discipline rather than a static document, allocation becomes less about finding the perfect starting mix and more about maintaining a defensible one as markets, objectives and circumstances all continue to move.