What is an asset allocation model
An asset allocation model is simply a combination of different asset classes put together in varying proportions to achieve a specific investment objective while taking into account the risk profile of the investor or the portfolio.
Here is an example of various risk profiled portfolios that have been constructed using different proportions of equity, fixed income, alternatives and cash. Although each portfolio comprises of all four asset classes, the combination or proportion of each asset class in the portfolio will determine the risk profile of the portfolio.
Each portfolio has its own asset allocation model which determines how much of each asset class is included.