Browse Investing

Asset Allocation and Diversification

Investing terms for asset allocation and diversification.

Asset Allocation and Diversification terms explain how assets are selected, combined, diversified, optimized, and rebalanced inside a portfolio.

Use this branch when asset mix, stock-bond allocation, diversification, portfolio type, optimization method, or rebalancing rule changes the portfolio exposure.

What This Branch Covers

AreaUse it for
Asset Classes and Stock-Bond MixAsset-allocation, diversification, stock-bond mix, portfolio construction, optimization, or rebalancing terms.
Diversification and Multi-Asset PortfoliosAsset-allocation, diversification, stock-bond mix, portfolio construction, optimization, or rebalancing terms.
Strategic and Tactical Asset AllocationAsset-allocation, diversification, stock-bond mix, portfolio construction, optimization, or rebalancing terms.

What to Check

Check the target allocation, asset classes, current weights, benchmark, diversification logic, correlation assumptions, risk budget, rebalancing band, transaction cost, and tax impact.

Common Mistakes

  • Treating diversification as a guarantee against loss.
  • Comparing allocations without checking objectives and risk budgets.
  • Ignoring transaction costs and taxes when rebalancing.
  • Using optimization output without reviewing assumptions and constraints.

This page is educational and does not recommend a specific portfolio, security, fund, tax treatment, or account choice.

In this section

Choose a subsection first. Deeper term pages live inside each subsection, which keeps large topic hubs readable.

Asset Classes

Asset-class, stock-bond mix, sector, and defensive-security terms used in allocation decisions.

Diversification

Diversification and multi-asset portfolio terms used to manage concentration and risk exposure.

Strategic Allocation

Strategic, tactical, and overweight allocation terms used in portfolio construction.

Revised on Sunday, June 21, 2026