Practitioners need to rethink the long-term, static policy portfolio—for example, a portfolio of 70 percent equities/30 percent bonds—that is so embedded in much of the institutional investing world. The problem is that the policy portfolio is based on a narrow view of asset allocation. The challenge of asset allocation boils down to three problems: (1) asset allocation has many elements, (2) asset allocation requires ongoing management, and (3) liabilities do not always track assets.