Saturday, January 8, 2011

Asset Allocation Fund

An Asset Allocation Fund is a type of fund which invests in more than one asset class. The types of asset classes that theses funds will invest in include stocks, bonds, cash, commodities, property, currencies, and both domestic and international variations of those. The asset mix may remain fixed or it may vary; there are two key variations to those that vary their asset mix: 1. Target date or "life cycle" funds, which alter their mix to suit the investor's risk profile and financial goals; and 2. Active asset allocators, which employ tactical or dynamic asset allocation to take advantage of market trends and convergence and divergence of valuations. Balanced funds offer investors a short-cut to building a portfolio, given the wider range of assets they tend to include; and potential associated benefits of risk and return optimization.

Synonyms: Asset allocator, Balanced fund

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