Asset Allocation Problems

Asset allocation refers to how, and at what proportion, an investment portfolio is allocated among different asset classes.  Asset classes include, for example, stocks, bonds, and cash.  Allocating assets among different investment classes enables an investor to diversify his or her portfolio.

How a brokerage firm helps determine a suitable asset allocation depends on the customer’s individual circumstances including risk tolerance, investment time horizon, and investment objective.

The asset allocation of a given portfolio must be closely monitored because a rise or fall in the performance of one asset class can create a rise or fall in other classes within a given portfolio.  If not carefully monitored, normal fluctuations in the performance of asset classes can cause a portfolio to become allocated differently than what an investor’s investment objective and risk tolerance call for.  This can give rise to losses in a portfolio.

Investors should weigh a number of considerations in determining a proper asset allocation.

PRM, P.C. handles cases that involve issues arising out of improper asset allocations.