What Is an Asset Allocation Fund? (SIE and Series 7 Exam)

An asset allocation fund is a mutual fund that invests across multiple asset classes — stocks, bonds, and cash — within a single portfolio. Unlike a balanced fund with a fixed mix, an asset allocation fund actively shifts its weightings based on market conditions. It is a key product type tested on the SIE and Series 7 exams in suitability and packaged products questions.