Which aspect is emphasized in the asset allocation process?

The asset allocation process is primarily focused on balancing risk and returns. This means that when constructing an investment portfolio, it's vital to understand how different assets contribute to overall risk and potential returns. By diversifying investments across various asset classes—such as stocks, bonds, and real estate—investors can tailor their portfolios to match their risk tolerance and investment goals.

Balancing risk and returns is essential because higher potential returns often come with increased risk. Effective asset allocation requires an investor to assess their financial situation, investment horizon, and comfort with market fluctuations. The goal is to create a mix of assets that optimizes returns while managing the level of risk in a way that the investor can handle, therefore improving the likelihood of achieving their financial objectives.

The other choices do not align with the fundamental principles of asset allocation. Maximizing taxes owed is counterproductive to building wealth; focusing solely on high returns disregards the associated risks; and limiting investments to only domestic stocks creates too much exposure to localized market volatility, neglecting the benefits of global diversification.