BNET Business Dictionary
Business Definition for: Asset Allocation
- an investment strategy that distributes investments in a portfolio so as to achieve the highest investment return while minimizing risk. Such a strategy usually apportions investments among cash equivalents, stock in domestic and foreign companies, fixed-income investments, and real estate.
Additional Resources
- Asset Allocation Funds: 6 Picks
- Managers of tactical asset allocation mutual funds can invest in everything from stocks to commodities, moving money out of one asset category and into another whenever they want. They?re supposed to buffer you against collapsing markets while offering growth potential. It all sounds great in theory. But in the real...
- Articles 2009-11-03
- Issues In Asset Allocation: Introduction
- The article talks about the asset allocation, there is a division of asset allocation into three categories: policy or strategic asset allocation, tactical asset allocation and dynamic strategies for asset allocation, which are designed to change the distribution of return. The strategic asset allocation can be characterized as a long-term...
- White papers 2001-06-19
- The Importance of Asset Allocation in an Investment Program
- This article defines asset allocation in more detail, explains why asset allocation decisions are so critical, and recommends an action plan for determining a prudent asset allocation structure. To support the discussion, it also presents a case study that illustrates asset allocation decision making. Asset allocation defines the percentage of...
- White papers 2000-06-01
- Asset Allocation and Mutual Funds
- Asset allocation is the current rage of the mutual fund industry. In its simplest terms, asset allocation refers to the process of adjusting the relative proportion of different asset classes in an investment portfolio. Precisely because it is so popular, the merits of asset allocation tend to be accepted uncritically....
- White papers
- Why I'm Skeptical About Asset Allocation
- Richard Bookstaber submits: I appeared last Friday on a the PBS program WealthTrack, where the topic was asset allocation, in particular, as host Consuelo Mack put it, how to build an all weather portfolio. I was the skeptic of the group. I don’t think there is some magic asset...
- External links 2009-09-27
- Asset Allocation In The Presence Of Varying Returns, Contribution Scenarios And Investment Horizons
- The article talks about the individual investors for those asset allocations are often cited as the most important decision in the investment process. The success of any asset allocation strategy depends on a host of related variables. This article also explains the role of the asset allocation decision in the...
- White papers 2003-04-01
- Active Asset Allocation
- The question this article address is about the last three years of poor stock market performance and what does it mean how to provide investment and financial planning advice? The article also defines that Investment management is organized around asset allocation and security selection. When it comes to asset allocation,...
- White papers 2003-01-01
- Asset Allocation
- The decision of asset allocation is one of, if not the, most important one an institutional investor can make. There are a number of considerations to take into account when trying to make this decision, and there is no right answer for all investors. The appropriate asset allocation is contingent...
- White papers 2000-08-15
- How To Incorporate Hedge Funds And Active Portfolio Management Into An Asset Allocation Framework
- Hedge funds and other actively managed strategies contain two fundamental sources of risk: Systematic risk, and Active risk. The conventional asset allocation approach employed by most plan sponsors and consultants fails to integrate these two sources of risk. This can lead to the formation of inefficient portfolios. In this article,...
- White papers 2002-06-01
- Tactical Asset Allocation: An Alternative Definition
- The intention of this note is to emphasize the difficulties when an investor applies a myopic optimization framework in a stochastic and dynamic market environment. Moreover, to define tactical asset allocation, it does not simplify the strategic optimization problem along the time dimension. Instead, to contrast strategic asset allocation with...
- White papers 2004-03-16
- REITs, Your Home, and the Asset-Allocation Decision
- Diversification across asset classes is an important component of an investment plan. It reduces risk. It is also important to diversify across asset classes that have low correlation. It is therefore a good diversifier of risk and should be considered when constructing an asset-allocation plan. Once a home-owning investor decides...
- White papers 2000-09-18
- Currency As Part Of Asset Allocation
- Asset Allocation is the single most important determinant of portfolio performance. In well-diversified portfolios, studies have shown that asset allocation decisions explain over 90% of the difference in plan returns. Despite the importance of asset allocation, many investment plans do not have professional and regular monitoring of the overall asset...
- White papers 2001-09-30
- Asset Allocation Math, Methods and Mistakes
- Over the last ten years, some very basic premises about asset allocation have been forgotten. The roots of asset allocation theory started with a piece of work called "The Capital Asset Pricing Model" (CAPM-beta as a measure of risk) and evolved into "Modern Portfolio Theory" (MPT- Standard deviation as a...
- White papers 2001-06-01
- Asset Allocation Policy: Execution in Volatile Markets
- Asset Allocation contributes significantly to investment performance. During volatile markets, determining whether to stick to a specified policy, or deviate from it based upon the investment management outlook, presents a daunting task to plan sponsors. This white paper provides a joint perspective from Watson Wyatt, a top investment management actuarial...
- White papers 2003-05-07
- Investing: Asset Allocation System
- This asset allocation system is designed to help you see how different asset mixes may be appropriate for investors in different circumstances. Use the sliders to enter the required information, and the One Asset Allocation system will provide a target allocation. As an investor approaches retirement or becomes more bearish...
- Tools & templates 2008-01-01
- Concepts of Investing: Asset Allocation
- There are studies that show asset allocation is the primary determinant for portofolio performance. In other words, if you buy the right industries, and have diversified well, the stocks aren't the reason you have good returns. The three variableswhich are chosen were asset allocation, market timing and individual stock selections....
- White papers 2003-01-01
- Assessing Risk Tolerance For Asset Allocation
- This article proposes a risk tolerance questionnaire that develops asset allocation guidelines as a dual function of risk tolerance and time horizon. Although no risk tolerance questionnaire by itself can provide a definitive answer to the asset allocation question, it can be a useful instrument for making a first pass...
- White papers 2003-03-01
- Hedge Fund-of-Funds Asset Allocation Using a Convergent and Divergent Strategy Approach
- Hedge fund asset allocation can be a challenging endeavor given the dearth of tools available to deal with the unique statistical characteristics of long and short strategies. From a top-down perspective, the hedge fund industry is classified into several substyle categories including long/short equity, market neutral equity, convertible bond arbitrage,...
- White papers 2004-04-01
- Integrating Risk Management Into the Asset-Allocation Process
- The first part of this white paper is intended to encourage plan sponsors to think broadly about risk management and its role in the asset-allocation process. The second part presents a plan sponsor perspective of how risk management can be integrated into all aspects of asset allocation. This is done...
- White papers 2003-07-23
- Achieving Optimal Asset Allocation
- Asset allocation is a fundamental investing principle, because it helps investors maximize profits while minimizing risk. The different asset allocation strategies described above can help any investor do this regardless of their risk tolerance and investment goals. In turn, choosing an appropriate asset allocation strategy and conducting periodic reviews will...
- White papers 2004-06-15
