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asset allocation investment & finance definition
The
allocation of investment dollars between major asset classes such as stocks,
bonds, precious metals, real estate, and cash. Asset allocation is a highly
recommended investment strategy because it lets investors diversify risk
between different investments. For example, if the stock market is performing
poorly, then it is likely that the fixed-income market is performing well as
investors shift money from stocks to bonds in order to lock in a return. In
this case, an investor with a well-allocated portfolio will lose money on
stocks but gain money on bonds. Asset allocation is a way for investors to
weather market downturns by spreading their risk.
See asset allocation in Wall Street Words
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