How is the DALI model allocation determined?

DALI models allow you to use our asset class rankings to systematically overweight the highest Relative Strength Asset Classes at all times while also maintaining a minimum level of diversification. 

DALI models take the current DALI rankings and minimum and maximum allocations for each asset class to determine how a portfolio is allocated. 

The way this process works is as follows:

1. First, each asset class is filled to its minimum. This allows us to maintain an allocation to certain asset classes at all times and ensures a minimum level of diversification is met. In the below example, you'll see that after this step, 40% of the portfolio has been allocated while 60% remains. Where the remaining 60% is allocated will be determined by the DALI rankings. A DALI model with higher minimum allocations for each asset class will be less tactical than a DALI model with lower minimums. This may be more suitable for a more conservative investor who does not want to deviate too far from their target allocation. For more aggressive investors, lower asset class minimums and therefore more freedom to tactically allocate based on Relative Strength may be more appropriate.
2. Next, we fill the #1 ranked asset class to its maximum or as far as possible with the assets that remain. In the below example, Domestic Equities is ranked #1. Since we already have 15% allocated to Domestic Equities due to its minimum, reaching Domestic Equities' 55% minimum requires 40% of the portfolio. After this, there is still 20% of the portfolio remaining to allocate to the remaining asset classes.
3. We now fill the #2 ranked asset class to its maximum or as far as possible with the remaining assets. In the below example, International Equities is ranked #2. Since we already have 5% allocated to International Equities due to its minimum, reaching International Equities' 20% minimum requires 15% of the portfolio. After this, there is still 5% of the portfolio remaining to allocate to the remaining asset classes.
   
4. We now fill the #3 ranked asset class to its maximum or as far as possible with the remaining assets. In this case, Commodities is ranked #3. Since Commodities has no minimum allocation, reaching its 20% minimum requires 20% of the portfolio. However, since we only have 5% of the portfolio left to allocate, we simply allocate that 5% to Commodities, and our process is now complete.