Are Asset Allocation and Diversification Different?

Asset Allocation is the process of dividing your money in different asset classes like property, shares, bonds, gold and cash, while diversification is the process of dividing your money within the asset class like buying shares of banking, telecom and FMCG sector in the equity allocation of your portfolio or buying property in Mumbai, Gurgaon and Singapore in the property allocation. Both the strategies help in reducing your investment risk.