An asset allocation model is an Investment strategy thoroughly researched by
Financial institutions. Such strategy enables the financial advisor to spread
the investments across various classes of investments, including money market
instruments, fixed interest securities, equities, commodities, property and
hedge funds. An asset allocation model ensures that investments are spread
across non-correlated asset classes or sectors, and are not concentrated in one
or two types of stocks. While one can never eliminate completely the risk of
fluctuating prices in the financial markets, the asset allocation model seeks
to limit fluctuations in the total portfolio value and provide a more
consistent return by spreading investments. In simple terms, an asset allocation
model seeks to implement the ancient wisdom of not putting all your eggs in one
basket. Based on the Asset Allocation model the financial advisor builds the
investment strategy and recommends the specific investments.