Which investment strategy involves mixing different types of assets?

The investment strategy that involves mixing different types of assets is asset allocation. This approach seeks to optimize the balance between risk and return by diversifying a portfolio among various asset classes, such as stocks, bonds, real estate, and cash equivalents. The central idea is that different assets have varying levels of risk and performance characteristics, which can reduce overall portfolio volatility and enhance returns over time.

By strategically allocating funds among asset classes based on an investor's goals, risk tolerance, and investment horizon, asset allocation helps to manage risk and improve the chances of achieving long-term financial objectives. This method acknowledges that while not all asset classes will perform well at the same time, their diverse performance can mitigate the impact of market fluctuations on the overall portfolio.

Other strategies such as hedging focus on reducing potential losses through techniques like options or futures contracts, while leverage involves borrowing funds to increase investment capacity, and market timing aims to buy and sell assets based on forecasts of market movements. However, none of these strategies inherently focus on the diversification aspect central to asset allocation.