Asset allocation is a proven investment strategy that balances risk with rewards (returns) by spreading investments across different asset classes such as stocks, bonds, and cash. Each asset class has different level of risk and return, which makes each of them behave differently over time depending on the prevailing market condition.
Fixed Asset Allocation portfolios are classified in three broad categories based on investors risk taking capacity i.e. Aggressive, Moderate and Conservative. In Aggressive portfolio, equity allocation will be higher so it will be suitable for investors with higher risk appetite. Moderate portfolio on the other hand is suitable for investors with relatively lower risk appetite wherein equity allocation remains at 70%. Lastly, conservative portfolio is suitable for investors with very low risk appetite wherein equity allocation is at 30%.
Fixed asset allocation portfolio will have consistent equity portion throughout and the underlying schemes will be reviewed annually. If the equity allocation increases due to market movement we will rebalance that portion as per our mentioned range, for e.g if equity allocation of 70% in Moderate portfolio increase to 80% because of the rise in market, we will book profit and bring the equity allocation back to 70% at the end of the year.
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