Asset allocation is the investment of money in different asset classes to reduce overall risk in portfolio. It is different from diversification across different stocks in a portfolio as asset allocation adds a second layer of diversification. A more complex version of asset allocation could be investing 25% each of one’s portfolio in equity, debt, real estate, and gold. Long term capital gains in equity and equity mutual funds are taxed at 10% above ₹1 lakh per year. There is a category of funds called asset allocation funds.

Source: Mint December 30, 2020 16:29 UTC