What Is Portfolio Rebalancing?
FINRA defines rebalancing as regular adjustments to hit the target allocation again.
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1.What is a target allocation?
FINRA defines rebalancing as regular adjustments to hit the target allocation again.
2.Why does a mix drift from its target even if you buy and sell nothing?
Drift changes the risk of a portfolio even when you trade nothing.
3.Besides price moves, what two things can shift the weights?
Either one changes the weights, even if prices stand still.
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Sources (4)
- FINRA: Asset Allocation and Diversification (Investing Basics)
- Jaconetti, C. M., Kinniry Jr., F. M., Zilbering, Y.: Best practices for portfolio rebalancing, Vanguard research, July 2010
- Daryanani, G.: Opportunistic Rebalancing: A New Paradigm for Wealth Managers, Journal of Financial Planning, January 2008
- Eigene Rechnung: Rebalancing-Beispiel
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