Asset allocation as it has traditionally been conceived has taken a beating over the last few years, and especially since the start of the pandemic. The old 60/40 allocation model has been cast aside for years, and investors are using many new techniques to allocate, such as factoring. However, one easy-to-implement and effective way to think about allocation is the balance of active and passive investments one holds. Active investments, when well done, can offer long-term outperformance. However, they also have more significant risks. Accordingly, this can be the risk/upside portion of a portfolio, while passive strategies, which are almost by definition more diversified, can be more of a hedge.
FINSUM: This not only makes sense in equities, but this consideration about active vs passive holds across different asset classes as well.