Asset allocation fund
Asset allocation funds spread their investment
among several asset classes. The objective is to reduce the
volatility and the risk of the whole portfolio.
Consequently, the investment may include stocks,
foreign stocks, precious metals, real estate stocks, bonds, foreign
bonds and money market instruments. Fund managers try to balance
allocation so that when a sector performance is low it is
compensated by another type of investment that perform better under
the same conditions.
It follows similar management priorities that is
found in balanced funds. It is important to remember that the
objective is to balance growth versus income.
Long term growth being the main focus it is the
investment type for those being risk averse and who are
uncomfortable with volatility. The expectation of these funds are
not as high as funds of higher risks.
