Asset Allocation

Asset allocation is the process of allocating the investible surplus across various asset classes to diversify as per investment objective.

Diversification reduces the overall risk in terms of the variability of returns for a given level of expected return.

A mixture of asset classes is more likely to meet the investor's expectations in terms of the amount of risk and possible returns.

Factors determining asset allocation -
Financial Goals
Risk Profile
Life Cycle Stage
Wealth Cycle Stage
Amount of Investment
Tenure of Investment

Types of Asset Allocation
Strategic Asset Allocation
Tactical Asset Allocation
Dynamic Asset Allocation
Model Portfolios

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