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Glossary

Asset Allocation

Financial Term

Asset allocation is a strategy used by investors to distribute their investments across various asset classes, such as stocks, bonds, and cash, in order to achieve a specific investment goal or to minimize overall risk.

The process of asset allocation starts with identifying an investor*s objectives, risk tolerance, and time horizon. Based on these factors, the investor can create a portfolio that will maximize returns while minimizing risk. This involves selecting a combination of assets that will provide the desired level of risk and return.

Asset allocation is used widely in the financial industry, especially by portfolio managers and financial advisors. It allows investors to diversify their investments and reduce their overall risk exposure. By spreading investments across a range of assets, investors can avoid putting all their eggs in one basket and potentially lose large amounts of money if the market takes an unexpected turn.

Overall, asset allocation is an important part of the investment process that helps investors achieve their financial goals while minimizing risk exposure.




Investment Services Industry

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