Asset allocation merely refers to the distribution of the main asset classes in an investment portfolio. There are a variety of styles, market capitalizations, sectors, countries, market breadth, and equities or fixed income. The asset allocation strategy that is applied will have a significant effect on the portfolio’s yield and volatility.


  • Asset allocation can determine up to 90% of a portfolio’s yield

    Studies have shown that 90% of the difference in yields between different investment portfolios is due to the different asset allocation strategies they apply.* In other words, the results are largely determined by the chosen asset allocation strategy, and not necessarily by the ability to select individual stocks.

    * Source: Financial Analysts Journal May/June 1991.

  • Take advantage of the specific exposure that can be achieved with iShares ETFs

    Because iShares ETFs are specific investments, they are an ideal tool for applying asset allocation strategies. iShares ETFs were designed to provide a simple mechanism to achieve different types of exposure, both at a basic level as a “core portfolio” and at a more tactical and advantageous level.

  • Achieve your investment goals

    Equity securities usually outperform other asset classes in the long-term. For many investors with a reasonable long-term horizon (usually 10 years or more), this asset class can represent the largest percentage of their portfolio. However, equity securities are an extremely broad investment category. Assess more specific categories when determining what equity securities are best suited to your needs:

    • Decide between different market capitalizations (large, medium, and small).
    • Pick a suitable investment style (growth or value) or make sure that you have a combination of both
    • Diversify across multiple sectors and industries and maybe add some sector specific exposure in a sector or industry you fully trust.
  • Consider fixed income stocks and cash

    Many investors complement their investments in equities with fixed-income instruments and cash. Debt products are primarily designed to provide income and their value will fluctuate according to the fluctuation of interest rates. Investments in the money market, on the other hand, seek to maintain a stable theoretical price.

    Regardless of the asset allocation strategy you choose, your decisions should reflect the goals of the investment portfolio you are managing.