Rebalancing based on portfolio drift can maintain desired asset allocation from "summary" of All About Asset Allocation, Second Edition by Richard Ferri
When constructing an investment portfolio, it is crucial to establish an initial asset allocation that aligns with your financial goals and risk tolerance. However, due to market fluctuations, the values of different asset classes within your portfolio may shift over time, resulting in a deviation from your desired allocation. This phenomenon is known as portfolio drift. Portfolio drift can have significant implications for your overall investment strategy. If left unchecked, it can lead to a misalignment between your portfolio's risk profile and your investment objectives. To address this issue, it is essential to periodically review your portfolio and rebalance it back to your target asset allocation. Rebal...
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