Asset allocation fund,
Definition of Asset allocation fund:
Asset allocation funds were developed from modern portfolio theory. Modern portfolio theory shows that investors can achieve optimal returns by investing in a diversified portfolio of investments included in an efficient frontier. The standard applications of modern portfolio theory investing include an efficient frontier of stocks, bonds and cash equivalents. Furthermore, modern portfolio theory outlines how a portfolio can vary its asset mix to tailor to the risk tolerance of the investor.
Mutual fund that prefers to invest in assets of various classes such as bonds, precious metals, and real estate.
An asset allocation fund is a fund that provides investors with a diversified portfolio of investments across various asset classes. The asset allocation of the fund can be fixed or variable among a mix of asset classes, meaning that it may be held to fixed percentages of asset classes or allowed to go overweight on some depending on market conditions. Popular asset categories for asset allocation funds include stocks, bonds and cash equivalents that may also be spread out geographically for additional diversification. .
How to use Asset allocation fund in a sentence?
- Asset allocation funds are a product of modern portfolio theory.
- An asset allocation fund attempts to create an optimal portfolio given an investor's risk tolerance.
- Asset allocation funds come in potentially endless variations. The funds will all seek optimal diversification, but they all have different mixes of asset classes and follow unique internal rules.
- Some of the most common asset allocation funds include balanced funds and target-date funds.
Meaning of Asset allocation fund & Asset allocation fund Definition