Asset Allocation Can Limit Portfolio Volatility

Every investor has different goals, risk appetite and time horizon when it comes to their financial goals. Based on these factors, an investor can allocate investments across different asset classes such as debt, equity, gold, cash, real estate in the desired proportion as per one’s profile. This practice is called asset allocation. Asset allocation enables investors to tide over different market conditions comfortably by limiting the overall volatility in the portfolio. Why Asset Allocation? Markets in general are dynamic in nature. No two asset classes perform similarly at any given point in time. This is because not all the asset classes will react to a development in the same manner. Nobody can predict which asset class will outperform or underperform at any given point in time. Therefore, the optimal approach is to invest across asset classes. For example, when equity markets...