Asset allocation is a key factor in portfolio performance from "summary" of Institutional Investment Management by Frank J. Fabozzi
Asset allocation refers to the distribution of a portfolio's investments across different asset classes such as stocks, bonds, and cash equivalents. It is a crucial decision that institutional investors must make as it has a significant impact on the overall performance of the portfolio. The asset allocation decision is based on the investor's objectives, risk tolerance, and time horizon. The key factor in portfolio performance lies in the strategic allocation of assets. By diversifying investments across different asset classes, investors can reduce the risk associated with any single investment. This diversification can help the portfolio weather market fluctuations and minimize losses during downturns. Additionally, asset allocation can also help capture returns from different sectors and industries, thus potential...
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