Construction
The layer that determines how individual return sources are combined and sized — weighting, risk targeting, rebalancing and constraint application — as distinct from the signals being combined.
Why it matters
Construction is where most of the realized difference between two funds running identical signals comes from, and it is the layer least often disclosed. Risk parity, volatility targeting and rebalancing frequency are construction decisions, and each one materially changes the return series without changing a single signal. For an autonomous system, construction is also where authority limits are actually expressed, which makes it a governance surface as much as an investment one.
What it is not
These are routinely confused with Construction. The distinctions are not pedantic — each one has consequences for how a system is governed.
Allocation decides how much goes to each strategy. Construction decides how each strategy is built and how the whole is sized.
Relationships
Typed edges into the rest of the ontology. These are what make the canon traversable rather than merely readable.
| Verb | Target | Meaning |
|---|---|---|
relatedTo | Authority Grant | An association too weak or too general for a stronger verb. |
Record
| Canonical identifier | QIS-TERM-00039 |
| Status | Canonical industry term |
| Adoption | Widely used |
| Domain · Layer | Strategy families · Capital |
| Origin | Standard classification for the portfolio assembly layer. |
| Semantic aliases | None recorded. |
| First published | 2026-08-02 |
| Last reviewed | 2026-08-02 · 180-day cycle |
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