90/10 Strategy


90/10 Strategy
An investing strategy that involves deploying 90% of one's investment capital in interest-bearing instruments that have a lower degree of risk, and the balance 10% in high-risk investments. This is a relatively conservative investment strategy that aims to generate higher yields on the overall portfolio. Potential losses will typically be limited to the 10% that is invested in the high-risk investments, depending on the quality of bonds purchased.

A common application of the 90/10 strategy involves the use of short-term Treasury Bills for the fixed-income component (90% of the portfolio), with the balance 10% used for higher risk securities such as equity or index options or warrants.

For example, assume an investor with a $100,000 portfolio uses the 90/10 strategy. He or she invests $90,000 in one-year Treasury Bills that yield 4% per annum, with the balance $10,000 deployed in equity in the S&P 500. If the S&P 500 returns 10% at the end of one year, the overall return on the portfolio would be 4.6% (0.90 x 4% + 0.10 x 10%). However, if the S&P 500 declines by 10%, the overall return on the portfolio after one year would be 2.6% (0.90 x 4% + 0.10 x -10%).


Investment dictionary. . 2012.

Look at other dictionaries:

  • Strategy video game — Part of a series on …   Wikipedia

  • Strategy guide — Strategy guides (攻略本 in Japan, literally capture book ) are instruction books that contain hints or complete solutions to specific video games. The line between strategy guides and walkthroughs is somewhat blurred, with the former often… …   Wikipedia

  • Strategy Safari — (FT Prentice Hall, 2002), subtitled A Guided Tour Through the Wilds of Strategic Management by Henry Mintzberg, Bruce Ahlstrand and Joseph Lampel is an overview of the full field of academic and business studies of strategy, based on a previous… …   Wikipedia

  • Strategy & Tactics — ( S T ) is a wargaming magazine now published by Decision Games, notable for its groundbreaking move of publishing a complete new wargame in each issue. Beginnings Strategy Tactics began life in 1966 as a wargaming fanzine published by Chris… …   Wikipedia

  • strategy — strategy, tactics, logistics as used in relation to warfare are not always clearly distinguished. Strategy is the art or science involved in the direction of the forces at his disposal by the commander in chief of a belligerent nation or by those …   New Dictionary of Synonyms

  • Strategy — Strat e*gy, n. [Gr. ?: cf. F. strat[ e]gie. See {Stratagem}.] 1. The science of military command, or the science of projecting campaigns and directing great military movements; generalship. [1913 Webster] 2. The use of stratagem or artifice.… …   The Collaborative International Dictionary of English

  • strategy game — UK US noun [countable] [singular strategy game plural strategy games] computing a computer game, for example a war game, in which a player makes decisions about the whole game rather than pretending to be a particular character …   Useful english dictionary

  • Strategy X — may refer to: * Strategy X (video game), an Atari 2600 game *, the first episode of …   Wikipedia

  • strategy — I noun approach, arrangement, art of war, artifice, battle maneuver, campaign, careful methods, careful plans, consilium, contrivance, course, course of action, cunning, design, devices, engineering, forethought, intrigue, intriguery, invention,… …   Law dictionary

  • Strategy (patrón de diseño) — Strategy (Estrategia) es un patrón de diseño para el desarrollo de software. El patrón Strategy permite mantener un conjunto de algoritmos de los que el objeto cliente puede elegir aquel que le conviene e intercambiarlo según sus necesidades. Los …   Enciclopedia Universal

  • strategy — strategy, tactics In war, as in politics and business, strategy is used of an overall plan of action embodying certain principles and objectives, and tactics is used of the detailed means adopted to achieve them. Tactics is normally treated as a… …   Modern English usage