in Chapter 16 - investment management, part 3 - risk budgeting, and part 4 - portfolio construction, actually, the content seems highly similar, that, 1) risk budgeting: there are two parts, one is allocating overall risk into strategic risk and active risk, and the other is allocating the total active risk across portfolios. 2) portfolio construction: this involves a two-stage process, the first one is seting a strategic benchmark by which to measure straegic risk, the second one is selecting managers to allcoate the active risk. Is my understanding correct? on that case, is there difference between the two topics? i.e. risk budgeting for investment strategy and investment portfolio construction.
You are correct, in that the content is extremely similar across these two sections of the chapter and you've given a great summary here of the key content. Risk budgeting can be used in a wider context for an organisation but when it is used for setting an investment strategy it is about the construction of the appropriate investment portfolio.
