Asset Allocation and Alternative Investments

Asset allocation is simply what you have invested in and the weightings an investor assigns to each asset class. “The goal of asset allocation is to get the best possible expected return/risk profile.” 1 The majority of professionals in the world of finance believe that asset allocation will affect returns. By diversifying your assets, an investor will presumably lower risk and increase returns. For example, hedge funds can be used to reduce risk and/or possibly increase returns with a foreign or domestic equity index (Table 10.1). These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.