what is asset allocation? different asset classes different asset classes cashbondsstock*real estate...

What is Asset What is Asset Allocation?Allocation?

Different Asset ClassesDifferent Asset Classes

Factors influencing Asset Factors influencing Asset AllocationAllocation

1. Time Horizon1. Time Horizon

2. Risk Tolerance2. Risk Tolerance

3. Currency Risk3. Currency Risk

4. 4. CorrelationCorrelation

Why Asset Allocation?Why Asset Allocation?

RRIIsskk –– RReettuurrnn TTrraaddeeooffff

Risk-Return Trade OffRisk-Return Trade Off

Eeny, Meeny, Miney, Mo… Eeny, Meeny, Miney, Mo… Deciding What's Right!Deciding What's Right!

• As each Asset Class has varying levels of return As each Asset Class has varying levels of return for:for:

A certain risk, A certain risk,

Your risk tolerance, Your risk tolerance,

Investment objectives, Investment objectives,

Time horizon and Time horizon and

Available capital Available capital

• Two important questions:Two important questions:

a.a. which asset?which asset?

b.b. how much of it?how much of it?

Different Model Portfolio’s range from Different Model Portfolio’s range from conservative to aggressiveconservative to aggressive

Different Model PortfoliosDifferent Model Portfolios

RebalancinRebalancingg

Asset Allocation for Kumar and VivekAsset Allocation for Kumar and Vivek

Kumar Vivek

Fixed Income 10% 20%

Equities 30% 20%

Property 50% 50%

Gold 5% 5%

Cash 5% 5%

(Allocation is a percentage of Kumar and Vivek's (Allocation is a percentage of Kumar and Vivek's portfolios)portfolios)

ConclusionConclusion

CreditsCredits

Hiren BhattHiren Bhatt 0808

Devanshee SanghaviDevanshee Sanghavi 4343

Sagar ShahSagar Shah 4848

Samkit ShahSamkit Shah 4949