Asset allocation is an investment strategy which, considering the investor’s intentions, aims to balance and optimize the risk-return ratio by diversifying the investment across different asset classes, i.e. the different categories of financial assets such as commodities, bonds, stocks and cash.
The asset allocation is divided into:
- strategic asset allocation, where the allocation has a medium/long-term time reference;
- tactical asset allocation which, with a short-term time frame, exploits market trends;
- dynamic asset allocation which, with a very short time frame, varies considerably and rapidly when strong variations occur on the markets.
Read more: "How to create a winning investment strategy in 4 steps"
