Asset allocation is the process of carefully selecting and mixing different asset classes to balance the risk and reward characteristics of a portfolio. Asset classes, broadly, include shares (equities), bonds, cash and real assets (e.g., Property, Infrastructure & Commodities). Asset classes display different risk and return characteristics. Less risky asset classes (cash or bonds) are expected to have lower returns, whilst riskier asset classes (equity) have higher expected returns. You should expect to be rewarded through higher returns for taking more risks.

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