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Sagot :
Final answer:
Asset allocation involves selecting income-generating assets and utilizing hedging strategies to manage risk and ensure stable returns.
Explanation:
Asset allocation involves spreading investments across various financial assets to maximize profit while minimizing risk. When aiming for an income-focused portfolio, assets are selected based on their ability to provide a consistent income stream, such as prioritizing assets that pay dividends.
Hedging strategies can also be utilized to ensure a stable return amidst market volatility, offering a way to manage risk and maintain income levels. Furthermore, diversification across sectors and asset classes is recommended by asset managers to promote growth and reduce performance volatility.
Learn more about Optimizing income investment portfolios here:
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