What Is Asset Allocation?
The video quotes FINRA: the mix is how much sits in each asset class such as shares, bonds or cash.
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1.How does FINRA describe asset allocation?
The video quotes FINRA: the mix is how much sits in each asset class such as shares, bonds or cash.
2.What is diversification, as distinguished from asset allocation?
FINRA: diversification spreads investments among and within asset classes; allocation is the portion in each class.
3.What does the mix depend on, according to FINRA?
FINRA adds that the mix depends on factors such as risk tolerance and time horizon.
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Sources (4)
- FINRA: Asset Allocation and Diversification (Investing Basics)
- Brinson, G. P., Hood, L. R., Beebower, G. L.: Determinants of Portfolio Performance, Financial Analysts Journal 1986; Nachdruck FAJ Jan./Feb. 1995 (Reihe 1985-1994)
- Ibbotson, R. G., Kaplan, P. D.: Does Asset Allocation Policy Explain 40, 90, or 100 Percent of Performance?, Financial Analysts Journal 56(1), 2000, S. 26-33
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