According to CFA, the whole investment process could be investment process could be top down or bottom up.
The purpose of invesment is differ according to different investors. Investors could be devided into two category: individual , institution investors. The main purpose of investment include : achieve extrodinary return and control the risk within certain range.
Best investment would be the one fit the investor best.
From the top down approach, after done with client KYC, you should write the Investment Proposal Statement for client. Then you should prepare the Capital Market Expectation and decide the strategic asset allocation. After we have the Strategic Asset Allocation. We focus on on build the investment portfolio. As we have clear view on long term market expectation and short term expectation, we could have Tactical Asset Allocation which deviate in short term from Strategic Asset Allocation to take advantage of market opportunities. Then we choose individual investments within each asset class. Then we build a portfolio that refects the asset allocation strategy and security selection.
We need to regularly reviewing the portfolio's performance against benchmarks and rebalancing to maintain the desired asset allocation.
Last we need to adjust the investment policy stratement and asset allocation as the client's objectives and constrains change over time.
For example, we are doing asset allocation for a 42 yrs old professional. First we need to calculate his net wealth and potential financial needs.
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