B
Batsirai Kapembeza
Member
Hello everyone,
The Core Reading in Chapter 22: Portfolio Management (2) states as an example;
"So, the 5% pa total allowable tracking error (the risk budget) will first need to be allocated between strategic risk and total active risk."
This is with reference to risk budgeting.I wanted to find out, how is this actually done practically?. I know what strategic risk is and what active risk is and I understand those two concepts completely, but I am struggling with understanding how tracking error for example can practically be allocated between these two.
Thank you.
The Core Reading in Chapter 22: Portfolio Management (2) states as an example;
"So, the 5% pa total allowable tracking error (the risk budget) will first need to be allocated between strategic risk and total active risk."
This is with reference to risk budgeting.I wanted to find out, how is this actually done practically?. I know what strategic risk is and what active risk is and I understand those two concepts completely, but I am struggling with understanding how tracking error for example can practically be allocated between these two.
Thank you.