Asset Allocation

At AUM Wealth we aim to balance risk and reward by dividing an investment portfolio among different types of asset classes such as equity, fixed income, cash and cash equivalents, real estate, etc. The theory is that asset allocation helps the investor to lessen the impact of risk their portfolio is exposed to as each asset class has a different correlation to one another.

Different asset class move in different directions. All types of asset classes hardly perform in tandem. One might assume that it is best to invest in mutual funds that is performing really well at a particular time with an aim to time the market. However, it is quite challenging for any individual to predict in which direction any asset class would move at any given point of time. For instance, when equities may be up, gold investment might go down and vice versa. So, it makes sense to allocate investments in a mix of asset classes. This is done so that if one set of asset classes or funds