Investment
Asset Allocation
The professional process of distributing investment capital among different asset classes (e.g., equities, fixed income, cash, alternatives) to optimize risk-adjusted returns in accordance with the portfolio's objectives, risk tolerance, and constraints, as established in official investment policy statements and regulatory frameworks (CFA Institute, GIPS, MiFID II).
Quick answer: The professional process of distributing investment capital among different asset classes (e.g., equities, fixed income, cash, alternatives) to optimize risk-adjusted returns in accordance with the portfolio's objectives, risk tolerance, and constraints, as established in official investment policy statements and regulatory frameworks (CFA Institute, GIPS, MiFID II).
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Quick answer
The professional process of distributing investment capital among different asset classes (e.g., equities, fixed income, cash, alternatives) to optimize risk-adjusted returns in accordance with the portfolio's objectives, risk tolerance, and constraints, as established in official investment policy statements and regulatory frameworks (CFA Institute, GIPS, MiFID II).
Why it matters
Asset Allocation matters because it supports clear communication in Investment contexts for Financial Analysts, Bankers, and Traders. It also connects to aviation training and exam language such as CFA, ACCA, and FRM.
Editorial context
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Definition
The professional process of distributing investment capital among different asset classes (e.g., equities, fixed income, cash, alternatives) to optimize risk-adjusted returns in accordance with the portfolio's objectives, risk tolerance, and constraints, as established in official investment policy statements and regulatory frameworks (CFA Institute, GIPS, MiFID II).
Operational example
A strategic asset allocation policy seeks to maintain a target mix of equities, bonds, and cash that aligns with the client's investment objectives and risk profile.
Localized term
Asset Allocation
Localized example
Eine strategische Asset Allocation-Politik zielt darauf ab, eine Zielmischung aus Aktien, Anleihen und Bargeld beizubehalten, die mit den Anlagezielen und dem Risikoprofil des Kunden übereinstimmt.
Definition language
English reference definition
Source
CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
Target audience
- Financial Analysts
- Bankers
- Traders
