Importance of Asset Allocation

Posted On Friday, Mar 20, 2020


It may not be very complicated to determine your financial goal – a comfortable retirement, children’s higher education, a new house or a new car are some of the popular goals but developing an appropriate asset allocation plan designed to meet those goals can be reasonably easy. Using online asset allocators can prove to be valuable to reduce volatility in your portfolio and enhance diversification.

While generally investments involve risks including a possible loss of principal, the risk gets proportionally mitigated when allocated prudently in different asset classes this process is also known as diversification. Typically, higher the returns, is higher the risk involved. Investors should understand fluctuations is one of the core characteristics of equity investments. Stock prices change, sometimes rapidly and dramatically due to factors affecting individual companies, particular industries, sectors or general market conditions. Bond prices generally move in the opposite direction of interest rates. The biggest factor in determining long-term investment success has been asset allocation. Asset allocation is investing your money in different categories of assets - typically equities, bonds and commodities, so your investments are well diversified.

Asset allocation is based on the premise that the different asset classes have varying cycles of performance, and that depending on your financial goal.

Ultimately, the objective of a good asset allocation plan is to develop an investment portfolio that will help you reach your financial objectives with the degree of risk you find comfortable. How can asset allocation help you?

• Reduce risk.
Portfolio diversification may reduce the amount of volatility you experience by simultaneously spreading market risk across many different asset classes.

• Improve your opportunity to earn more consistent returns over time.
By investing in several asset classes, you may improve your chances of participating in market gains and lessen the impact of poor-performing asset categories on your overall portfolio returns.

• Stay focused on your goals.
A well-allocated portfolio improves the need to constantly adjust investment positions to chase market trends, and can help reduce the urge to buy or sell in response to the market’s short-term ups and downs.

How does one get prudent asset allocation?

To make investment in mutual funds easy, as it should be and to help you reach your financial goals try Quantum’s asset allocator - click here and By answering few simple questions, in just 3 easy steps you can get a well balanced portfolio suggestion from Quantum which has the potential to take you a step closer towards your financial goal. Quantum’s asset allocator gives you the freedom to build your portfolio either by investing in lump sum or via SIP. Take your first step towards your financial goal, start your asset allocation now.

Disclaimer, Statutory Details & Risk Factors:

The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.

Mutual fund investments are subject to market risks read all scheme related documents carefully.

Please visit – to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.

Above article is authored by Quantum.

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