What is asset allocation?
Asset allocation divides savings among classes such as stocks, bonds and cash equivalents.
Definition, calculation and mechanism
Classes may react differently to shocks; weights depend on goals, horizon and loss tolerance. Holding many similar products within one class may not diversify much. Examine underlying exposures, not names alone.
Interpretation, examples and limits
Market moves can change weights, prompting planned rebalancing with possible fees and taxes. There is no universal mix. Expected returns remain uncertain.
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