InvestorQ : What does Asset Allocation means?
priya Shah made post

What does Asset Allocation means?

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Mahima Roy answered.
1 year ago


Asset Allocation refers to the investment strategy wherein funds are allocated in different investment assets like stock, debenture, mutual funds, and other instruments of varying maturity and nature. This ensures that the investment portfolio created should be allocated in such a way that the selected asset should minimize the risk but ensure a certain level of returns. As risk and return are inversely correlated, assets are allocated by keeping in mind the risk-reward criteria of the investor.


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Roshni Hegde answered.
1 year ago


Asset allocation is a strategy applied to the different asset class. These financial asset classes include risks and return. Thus asset allocation here works as an attempt to balance risk and allotting the percentage of each asset in an investment portfolio. Main asset classes like equities, fixed-income, cash and equivalents each vary in risk and returns and behave differently over time. It is also commonly known as a rigorous implementation of an investment strategy.

To further discuss in detail, asset allocation strategies are of different types based on investment goals, risk tolerance, time frames, and diversification. So the investment goes into different types of assets like Equity, Debt, ETF, Gold, etc.