Definition for : Asset allocation

The "asset allocation" refers to the strategy/process whereby an Investment portfolio is allocated (distributed) between different asset categories (Equity, Bond, real estate, commodities¬Ö). The asset allocation process must reflect both (i) the Investors' own preferences, for instance in terms of Risk-reward ratio or liquidity; and (ii) the Portfolio manager's own directional views on the expected performance of each asset categories.
(See Chapter 18 Risk and return of the Vernimmen) )
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