# What is asset allocation?

> Quick answer · Last updated 4 July 2026

Canonical HTML: https://moneyguide.org.uk/answers/what-is-asset-allocation/
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## In short

How you split investments between shares, bonds, cash and other assets. Younger long-term investors often hold more equities; those nearing retirement may increase bonds and cash to reduce volatility.

Asset allocation drives most portfolio return variation — more than individual stock picking.

Rebalancing yearly keeps your mix near target after market moves.

Pension and ISA wrappers do not change the allocation decision — only the tax treatment.

## Related

- [Risk tolerance explained](https://moneyguide.org.uk/investing/risk-tolerance-investing-explained/)
- [Pound-cost averaging](https://moneyguide.org.uk/investing/pound-cost-averaging-explained/)

## Primary source

moneyhelper.org.uk/en/savings/investing

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Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Information only — not regulated financial advice.