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Essay / Research Paper Abstract
This 10 page paper is written in two parts. The first part (2 pages) considers asset allocation, what it is and how it can be used. The second part of the paper looks at efficient market hypothesis and examines if brokers or investors use this theory to help with their investments. The bibliography cites 10 sources.
Page Count:
10 pages (~225 words per page)
File: TS14_TEassetemh.rtf
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Unformatted sample text from the term paper:
performance of the fund is that of asset allocation rather than finite portfolio and that it is asset allocation that is the primary influence in the risk and reward balance
in a portfolio. Active asset allocation may be defined as " the process of taking short or medium- term tactical positions within an investment portfolio, by varying the exposure to
different global markets and asset classes (equities, bonds and currencies), depending on a set of investment forecasts" (Pensions Week, 2004). The simple concept is that the portfolio of investments is
one that will match the needs of the investor, taking into account different aspects such as risk tolerance of the investor and the term of the planned investment (Money
Management, 2004). This will mean the amount invested will be spread between three main classes; these are usually equities, fixed income securities and cash equivalents (Money Management, 2004). Increased
spread may also be achieved with a spread over different markets (Money Management, 2004). The underlying premises are twofold; firstly that particular asset types will tend to
follow similar patterns. Secondly, when compared the returns of the different asset classes will rarely move in parallel. This means where there s an asset allocations uses the different asset
classes there is a spread of risk as the risks of one asset are offset by another which is likely to move in a different way. The sue of
asset allocation may reduce the risk at the same time as preserving profits and has the aim of increasing the return over the period of the investment. The process should
not be interpreted as static and the level of each asset in the portfolio will depend on the investors, this may also change over time. In general terms, for
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