Asset allocation represents an investment approach that distributes an investor's money among the assets in a portfolio, based on risk tolerance. For example, a younger investor has a higher tolerance for risk than an investor over 60 years old. In this scenario, a portfolio manager may choose to invest a far higher percentage of money into stocks (which are more volatile) and a much lower percentage into bonds (which is more stable) for the younger investor. The algorithm rebalances the portfolio to meet the risk tolerance of the investor and what he or she has allocated in their portfolio.