The investment process of the Exchange Fund is underpinned by decisions on two types of asset allocation — the strategic asset allocation and the tactical asset allocation.
The SAA, reflected in the investment benchmark, directs the medium-to-long-term investment strategy in terms of the distribution and maturity profile of assets based on the investment objectives of the Exchange Fund. It is approved by the Exchange Fund Advisory Committee (EFAC) on an annual basis.
Guided by the SAA, assets are tactically allocated in an attempt to achieve an excess return over the benchmark with a short-to-medium term focus. Under the TAA, investment positions can be adjusted to capture short-term market opportunities or reduce risks within the allowed tracking error limit.