Explanation

Strategic Asset Allocation refers to the long-term allocation of investments across various asset classes (such as stocks, bonds, real estate, etc.) that is designed to achieve the client's investment objectives while considering their risk tolerance and constraints. This is established in the investment policy statement and serves as the benchmark for the portfolio.

Why the other options are incorrect:

• A. Security Selection: This refers to the process of choosing specific securities within an asset class, not the allocation across asset classes.
• B. Tactical Asset Allocation: This involves short-term deviations from the strategic asset allocation to take advantage of market opportunities or avoid perceived risks. It is not the long-term set of exposures described in the question.

Key Distinction:

• Strategic Asset Allocation = Long-term, policy-based allocation
• Tactical Asset Allocation = Short-term, active deviations from strategic allocation
• Security Selection = Choosing individual securities within asset classes

The question specifically mentions "set of exposures to the permissible asset classes" and "expected to achieve the client's long-term objectives," which perfectly describes strategic asset allocation.