Asset
Asset is every investment which helps us to generate income. As an example we can say investment in bonds, equity, debentures, treasury bills, mutual funds etc all are considered as asset. The wealth of an investor are it's asset.
Asset Allocation
In investment planning whenever we make a portfolio the asset allocation is the main task for any fund manager. Portfolio is divided into different asset classes. Generally, there are four asset class.
1. Equity.
2. Debt.
3. Cash.
4. Precious Metal.
The risk and return features of each asset class are distinctive. To decide which asset class will constitute of how much percentage in the portfolio depends upon the various factors like risk taking power of a client, time horizon, goals of a client and various other factors. Return and risk attributes decides the asset allocation. Different asset classes have different expected rate of return.
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