Which option is NOT considered a primary input for asset allocation models?

In the context of asset allocation models, primary inputs typically include returns, risks, and correlations among asset classes. These inputs are crucial for determining how to allocate investments effectively to achieve desired financial outcomes.

Returns are essential as they represent the expected gains from different investment options, while risks quantify the potential losses associated with those investments. Correlation measures how different assets move in relation to one another, which helps in understanding how to mix asset classes to optimize performance while managing risk.

Diversification, while an important concept in investment strategy, is more of a strategy or practice derived from the use of the primary inputs rather than an input itself. It involves spreading investments across various assets to reduce risk, but it does not provide direct quantitative data that can be fed into an asset allocation model. Instead, diversification relies on the returns, risks, and correlations of the assets involved.

Consequently, within the context of this question, diversification is correctly identified as the option that does not serve as a primary input for asset allocation models.