Asset Allocation Funds can invest in securities from all securities markets, usually with no required minimum percentages. This strategy seeks to limit market risk and to maximize overall returns by allowing for the shifting between investment categories, based on market and economic conditions as viewed by the portfolio manager.
Asset Allocation Funds are generally differentiated by the way they allocate their investments between these asset classes. Relatively conservative funds tend to place a larger portion of their investments in asset classes with historically lower risk/lower return potential. Conversely, aggressive funds tend to place a greater emphasis on asset classes with higher risk/higher return potential.
A mutual fund that invests in a number of different asset classes in order to maximize return on investment and minimize risk.