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, commoditiesÂ…). 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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