Portfolio Rebalancing Theory and Practice · Portfolio Rebalancing Theory and Practice Mr Chris...

Portfolio Rebalancing Theory and Practice

Mr Chris Tse, FRM, PRM, CFA, CAIA, CIIA, CFPCM

25 June 2010

June 2010 -

Asset characteristics and the rebalancing decision How frequently the portfolio should be monitoredTranslating conceptual rebalancing framework into practical strategies

Agenda

June 2010 -

Portfolio Rebalancing 101 Self Evaluation Test 1 - 5

June 2010 -

Breakdown of HNMI Financial Assets, 2006-2010F

Self Evaluation Test 1What’s your client’s current asset allocation?

June 2010 -

Aggressive Growth Product

100%100%

Single Country/Sector FundGlobal Income Fund

Income Product

100%100%

If you are a HNWI with US$100 million investable asset and receive two investment ideas from a private banker, which one would you choose?

Expected Return:

50% chance to have +50% p.a.(Principal + Return = US$150 million)

50% chance to have -50% p.a.(Principal + Return = US$50 million)

Expected Return:

100% chance to have 1% p.m.(Return = US$1 million p.m.)

Self Evaluation Test 2How do you trade-off in reality?

June 2010 -

A financial advisor has advised his client to buy China Life (02628) at HK$20 (forward P/E: 25X) and sell China Life at HK$28 (forward P/E: 25X) as he expected the high valuation of China Life can be supported by stronger-than-expected growth in earnings.

Has this financial advisor done a good job as he can materialize his view?

A regulator has made an query to a private banker regarding his view/advice for China Life when the China Life is valued at P/E 25X !!! BUY or SELL

Self Evaluation Test 3Have you justified your own advice?

June 2010 -

13,333

13,519

Hang Seng Index Performance (4/1999 – 3/2009)

Source: YAHOO! Finance, April 2009

Self Evaluation Test 4Do you create value through passive portfolio in LT?

How Cheap

How Expensive

June 2010 -

A financial advisor has advised his client to:

Self Evaluation Test 5Are you a good financial advisor?

Switch Out Switch In Return (HPR)Time Initial VolatilityFinal Volatility

nvestment Grade Bond FundBRIC Fund +10% March 2009 12% 24%

BRIC Fund India Fund +20% May 2009 24% 40%

ndia Fund China Equity Fund+25% June 2009 40% 44%

China Equity Indonesia Fund +20% August 200944% 48%

June 2010 -

Portfolio Rebalancing 101Please make sure whether you really need portfolio rebalancing

Learning Outcome 1

June 2010 -

Portfolio Rebalancing 102 Asset Allocation Theory and Practice

June 2010 -

What is Asset Allocation

Definition

It’s about diversifying one’s portfolio among asset classes such as bonds, stocks, real estate, or cashIt’s referred to in terms of the target percentages for each asset class. For example, a portfolio could have a mix of “60 percent stocks, 30 percent bonds and 10 percent cash”

June 2010 -

Rationale for Asset Allocation

Rationale

No one single asset class can meet all requirements of the an investorNo one single asset class will perform the best at all time: winners rotate.

Applying appropriate asset mix to achieve a target rate of return, for example:A conservative and old private client is expecting a 7% return per year; should a private banker recommend a single lump-sum investment of allocating 70% in an emerging market equity fund, say iSharesFTSE/Xinhua A50 China Tracker (02823)?

An aggressive and young professional is expecting a 12% return per year; should a private banker recommend a regular saving plan ofallocating 70% in a global bond fund?

June 2010 -

Pyramid of Wealth Allocation (General)

Individual Equity (up to 20%)

Regional Equity (up to 30%)

Global Equity & Bond (50% to 70%)

Non - CoreHolding

CoreHolding

HighRisk

Medium to High Risk

Low to Medium Risk

June 2010 -

Pyramid of Wealth Allocation (Asset Class)

Income generating instruments &/or Liquid

Assets

Global Equities

Sector

Hedge

Single Country

Regional

Cushioning portion accounts for 50% of asset base

Growth portion captures growth in short-to-medium term

Equity Core portion for long-term growth

June 2010 -

Pyramid of Wealth Allocation (Product)

Core & Strategic Investments

Liquid Assets

TacticalInvestments

Margin Account, Short- Term Stocks Trading, Derivatives

Local & Foreign Currency Deposits, Currency- Linked Options, Cash

Bonds, Guaranteed Investments, Structured Products (5 years +), Mutual Funds, Blue Chips, Real Estate Properties

June 2010 -

Global DiversificationThe Best Risk Management Approach

Source: Standard & Poor’s Micropal (MSCI) - as at 31 December, 2007. Rankings based on the 23 countries in the MSCI World Index. Past performance cannot guarantee future results.

1st 2nd 3rd

AustriaGreeceHong KongHong KongHong KongFinlandSwitzerlandSpainPortugalFinlandFinlandSwitzerlandNew ZealandNew ZealandGreeceAustriaCanadaSpainHong Kong

GermanyUnited KingdomAustraliaSwitzerlandLuxembourgNorwayUSASwedenSwitzerlandBelgiumSingaporeCanadaAustraliaAustriaSwedenNorwayNorwayNorwayGermany

NorwayHong KongUSAUSAFinlandJapanSwedenPortugalItalyItalySwedenDenmarkIrelandAustraliaGermanyGreeceJapanSingaporeNorway

1989199019911992199319941995199619971998199920002001200220032004200520062007

Best-Performing Developed Equity Markets (1989–2007)

http://images.google.co.uk/imgres?imgurl=www.tiscali.co.uk/reference/encyclopaedia/countryfacts/images/flags/large/c05007.gif&imgrefurl=http://www.tiscali.co.uk/reference/encyclopaedia/countryfacts/greece_flag.html&h=178&w=268&sz=3&tbnid=at1uR1BIdIgJ:&tbnh=71&tbnw=106&prev=/images%3Fq%3Dgreece%2Bflag%26hl%3Den%26lr%3D%26cr%3DcountryUK%7CcountryGB%26ie%3DUTF-8%26oe%3DUTF-8



June 2010 -

Significance of Asset Allocation

Brinson, Hood and Beebower : Determinants of Portfolio Performance, 1986, 1991: “Asset Allocation helps explain over 93% of a portfolio’s performance”.

Significance relative to return

June 2010 -

Suggesting the Right Allocation

Asset Allocation

Profile Objective

External Factors

June 2010 -

Suggesting the Right Allocation

Objective

Required Vs Desired

Time Horizon

Liquidity

Risk Profiling

Willingness Vs Ability

External Factors

Market Fluctuation

June 2010 -

Approaches to Asset Allocation

Strategic Asset Allocation Tactical Asset Allocation

Investors’ Management Investment Management

Using the inherent properties of each asset class

Move in and out of asset classes at the most beneficial time

Benchmark asset allocation to each asset class (Risk Profiling)

Deviations from the long term/benchmark (Beat the Market)

Selection of portfolios on the efficient frontier

Calls for upward shifts of the efficient frontier (Alpha Picking)

June 2010 -

Strategic Asset AllocationWhat Does Strategic Asset Allocation - SAA Mean?

A portfolio strategy that involves periodically rebalancing the portfolio in order to maintain a long-term goal for asset allocationAt the inception of the portfolio, a "base policy mix" is established based on expected returnsStrategic asset allocation generally implies a buy-and-hold strategy, even as the shift in the values of assets cause a drift from the initially established policy mixFor this reason, you may choose to adopt a constant-weighting approach to asset allocation. With this approach, you continually rebalance your portfolioBecause the value of assets can change given market conditions, the portfolio constantly needs to be re-adjusted to meet the policyFor example, if one asset were declining in value, you would purchase more of that asset, and if that asset value should increase, you would sell itThere are no hard-and-fast rules for the timing of portfolio rebalancing under strategic or constant-weighting asset allocationHowever, a common rule of thumb is that the portfolio should be rebalanced to its original mix when any given asset class moves more than 5% from its original value

June 2010 -

Risk Profiling – Typical Profiles

1. Income Investor: focus on regular dividend income & low volatility

2. Conservative Investor: focus on regular dividend income & possible long term capital appreciation with low volatility

3. Balanced Investor: focus on long term capital appreciation & possible dividend income with moderate volatility

4. Growth Investor: focus on medium to long term capital appreciation with moderate to high volatility

5. Aggressive Growth Investor: focus on capturing capital growth from high fluctuation of unit price

June 2010 -

Risk Profiling - Two Dimensions

Investment suitability

“Selling the right products to the right clients”

Client sophistication

Product sophistication

matches

Investment objective

Portfolio allocation

matches

SophisticationFocus on Product complexity:

Does the client understand the product’s complexity?

Risk toleranceFocus on Portfolio Risk:

Is the portfolio risk exposure consistent with the client’s risk tolerance?

Matches ?

June 2010 -

Aggressive Growth 100%100% Conservative

Growth

20%20%

40%40%40%40%

Income 20%20%20%20%60%60%

20%20%

80%80%Growth

40%40%60%60%

Moderate Growth

StocksBondsCash Equivalents

Source: Franklin Templeton Learning Academy

Risk Profiling – Strategic Asset Allocation

June 2010 -

Making Strategic Asset Allocation Work

Periodic RebalancingAvoid over exposure to riskAvoid under exposure to future growth potential

Periodic ReviewsReflect asset allocation to financial commitment over timeSmoothen the shift in asset class weightages

June 2010 -

Ways to Rebalance

Sell holdings that are over the target allocation

Increase the dollar amount to be invested and buy the under-allocated assets

Direct dividends from over-allocated assets to under-allocated assets

June 2010 -

When to Rebalance

Weekly, monthly, quarterly, semi-annually…..Trigger Point

Profit Taking (Meet Objective)Risk Limitation (Meet Risk Profiling)Market Fluctuations (Driven by External Factors)

Other factors to considerTaxTransaction Costs

June 2010 -

Periodic Rebalancing

50%50%Profile & objective based allocation

Bond FundsEquity FundsEXAMPLE

REBALANCING HELPS INVESTORS ENTER REBALANCING HELPS INVESTORS ENTER EQUITIES AT EQUITIES AT ‘‘LOWSLOWS’’ AND EXIT AT AND EXIT AT ‘‘HIGHSHIGHS’’ WITHOUT HAVING TO WITHOUT HAVING TO ‘‘TIMETIME’’ THE MARKETTHE MARKET

20%80%

50%50%Rebalance

Bull Market conditionsBull Market conditions

June 2010 -

Tactical Asset Allocation

What Does Tactical Asset Allocation - TAA Mean?An active management portfolio strategy that rebalances the percentage of assets held in various categories in order to take advantage of market pricing anomalies or strong market sectorsThis strategy allows portfolio managers to create extra value by taking advantage of certain situations in the marketplaceIt is as a moderately active strategy since managers return to the portfolio's original strategic asset mix when desired short-term profits are achievedInherently contrarian method of investing

June 2010 -


Portfolio Rebalancing 102Please make sure you know all the basics about asset allocation

Learning Outcome 2

June 2010 -

Portfolio Rebalancing 103 Portfolio Rebalancing Strategies

June 2010 -

Portfolio Rebalancing Strategy

Buy-and Hold StrategyTarget investment in stocks = Portfolio value – Floor value

Constant-Mix StrategyTarget investment in stocks = m x Portfolio value

Constant-Proportion Portfolio Insurance (CPPI) StrategyTarget investment in stocks = m x (Portfolio value – Floor value)

June 2010 -

Buy-and-hold Vs Constant Mix

The buy-and-hold strategy has a linear payoff to the performance of the stock market, whereas the constant weighted allocation strategy does not

Insured Asset Allocation - This is a type of dynamic asset allocation strategy where the payoff is convex

So finally the goal of asset allocation is to create a unique portfolio that suits your needs and wants in the market

June 2010 -

Applying Different Portfolio Rebalancing Strategies

Constant-Mix Buy-and-HoldCPPI

Market Up Underperform Outperform Outperform

Market Flat Outperform Neutral Underperform

Market Down Underperform Outperform Underperform

Payoff Curve Concave Linear Convex

Portfolio Insurance Selling Insurance None Buying Insurance

Multiplier 0<m<1 m=1 m>1

June 2010 -

60

65

70

75

80

85

90

95

100

105

110

T T+1 T+2 T+3 T+4 T+5 T+6 T+7 T+8 T+9 T+10

Date

Pric

e

Downward Trend

Downward Trend+20%

-20%+20%

-20%

+20%

-20%

+20%

-20%+20%

-20%

+5%-5%

+5%-5%

+5%-5% +5%

-5%+5%

-5%

±5% volatility

±20% volatility

Volatility Strategy: Fund with ±5% and ±20% volatility

Without Doing Rebalancing in Volatile Markets Ensures Loss

June 2010 -

Asymmetrical Oscillations Ensure Trend

Fund with upward trend

80

100

120

140

160

180

200

T T+1 T+2 T+3 T+4 T+5 T+6 T+7 T+8 T+9 T+10

Date

Pric

e

+10.5% +10.5 %

+10.5%

+10.5%

+10.5%

-5%-5%

-5%

-5%

-5%

June 2010 -

JP Morgan Global T raded -USD! (NX) B/B UDJ USD 16.36 MSCI World USD * (NX) O/B GRS GBP -11.71

52

58

64

70

76

82

88

94

100

106

112

118

124

Price Indexed

Percent Change

-48

-42

-36

-30

-24

-18

-12

-6

0

6

12

18

24

Apr Jul Oct 09 Apr Jul

Global Equities Vs Global Bond Good for Constant-Mix? Why?

Source: Morningstar

JP Morgan Global Govt Bond Index

MSCI World Index

MSCI World Vs JPM Global Govt Bond Index Performance (1/1/2008 - 30/9/2009)

June 2010 -

MSCI AC Asia Pac xJapan USD* (NX) 77.40 JP Morgan Global Traded -USD! (NX) 40.57

80

100

120

140

160

180

200

220

240

260

280

Price Indexed

Percent

Change

-20

0

20

40

60

80

100

120

140

160

180

05 06 07 08 09

Asian Equities Vs Global BondGood for CPPI? Why?

Uptrend: Equities Increased by 10% Underweight 25% Fixed IncomeDowntrend: Equities Dropped by 10% Overweight 50% Fixed Income

MSCI AC Asia Pacific ex-Japan Vs

JP Morgan Global Govt Bond

Index Performance (1/1/2004 - 30/9/2009)

Source: Morningstar

MSCI AC Asia Pacific ex-Japan Index

JPM Global Govt Bond Index

June 2010 -

Parameters Determining the Success of Different Portfolio Rebalancing Strategies

Target Market (ex-ante and ex-post volatility)

Expectation Horizon

Number of Top-up Investments (e.g. 4 times)

Target Floor Value at each Top-upsay 90%/80%/70%/60% of initial portfolio value for Constant-MixSay 110%/120%/130%/140% of initial portfolio value for CPPI

June 2010 -



Portfolio Rebalancing 103Please formulate your view on the target market before you are adopting your

portfolio rebalancing strategies

Learning Outcome 3

June 2010 -

Portfolio Rebalancing 104 Constant-Mix Strategy for Volatile Markets

June 2010 -

Applying Systematic Investing in Bull MarketEnjoying Market Volatility, Reducing Market Timing Risk

16,96211,888

Hang Seng Index Performance (12/1993 – 12/1999)Lump-sum Investing: +42.68%

Regular Saving: +65.25%


June 2010 -

Applying Systematic Investing in Bear MarketEnjoying Market Volatility, Reducing Market Timing Risk

16,96214,876

Hang Seng Index Performance (12/1999 – 12/2005)Lump-sum Investing: -12.3%



June 2010 -

Applying Systematic Investing in Flat MarketEnjoying Market Volatility, Reducing Market Timing Risk

13,333

13,519

Hang Seng Index Performance (4/1999 – 3/2009)Lump-sum Investing: +1.40%



June 2010 -

Maintaining A Long Term PerspectiveTime is Much More Important Than Timing

When is Trough? Time to Enter? When is Peak? Time to Exit?

Time as a Risk Moderator

Dollar Cost Averaging

Source: YAHOO！Finance

Excitement

Fear

Panic

June 2010 -

Regular Saving Follows Constant-Mix Strategy

Dollar Cost Averaging provides a guide to enter into the market, but how about “Safe Exit”?

DCA follows Constant-Mix Strategy (buy more at lows and buy less at highs)

Time Factor is both BUDDY and ENEMY to DCA

“Dynamic Dollar Cost Average”

Double overweight when current valuation is MUCH lower than the historical average valuation

Stop to Overweight when current valuation is MUCH higher than the historical average valuation

June 2010 -

Dynamic Dollar Cost Averaging

Source: Bloomberg (17 March 2009)

18X

12X

+/-20%

June 2010 -

Large Cap Vs Smaller Cap

Source: Bloomberg (12 October 2009)

June 2010 -

MSCI World Grs USD ! (NX) 12.81 MSCI World Value Grs USD ! (NX) 23.67 MSCI World Growth Grs USD ! (NX) 1.06

40

55

70

85

100

115

130

145

160

175

190

Price Indexed

Percent Change

-60

-45

-30

-15

0

15

30

45

60

75

90

02 03 04 05 06 07 08 09

Source: Morningstar

Practicing Value InvestingA Winner in a Volatile Market

MSCI World Growth

MSCI World Value

MSCI World Index Performance (1/1/2001 - 30/9/2009)

June 2010 -

Number of stocks with positive returns

Number of stocks with negative returns

2004Index Return:

+15.75%Index Return:

+26.8% 2000Index Return:

-14.0%

2002Index Return:

-19.0%2001

Index Return: -15.8%

2003Index Return:

+31.62%1999

1973

469595

822

1205

856

1275

1367 773

1320

1970

Source: Factset - As at 31 December, 2004. MSCI constituent returns data for MSCI All Country World Free Index measures the total return of each equity security in developed and emerging markets. Index is unmanaged and includes reinvested dividends. One cannot invest directly in an index. MSCI AC World Free aggregate returns from Bloomberg.

130

Bottom Up – Stock SelectionExplore Deep Value from Under-valued Stocks

June 2010 -

Historical Gold Prices Did Gold Market Exhibit Economic Trend?


June 2010 -

NASDAQ Index since 1995 Did Tech Stocks Exhibit Economic Trend?

Source: South China Morning Post (December 2005)

June 2010 -

The Value of Gold (1)

Gold has fallen out of favor for years

Since 1993, many central banks slashed their gold holdings for other safer

investments like US Treasury as reserves backup

Gold supply continued to rise, trapping gold prices in a downward spiral

Disinflation and its failure to preserve value had turned investors away

June 2010 -

Gold Glows Again Since 1999 (2)

The Washington Agreement on Gold • Limit on gold disposal by the European Central Bank & 14

central banks in Europe• Halted the price fall

Fragile stock marketsLow interest ratesUS Budget deficit ballooningUS Dollar diminishing in its strengthMiddle East crisisUnstable oil prices

June 2010 -

Historical Commodity Prices - CRB Index


June 2010 -


Historical Oil Prices – Brent Crude Oil

June 2010 -


Historical Oil Prices – New York Crude Oil Futures

June 2010 -




portfolio rebalancing strategiesPortfolio Rebalancing 104

Please make sure whether you know the parameters and the preferred habitat for constant-mix strategies

Learning Outcome 4

June 2010 -

Portfolio Rebalancing 105 CPPI Strategy for Trendy Markets

June 2010 -

Any Clear Trend in Hang Seng Index?

Source: Bloomberg (September 2009)

+400%Aug 1984-Sep

198738 Months

+520%Jul 1989-Dec 1993

54 Months

+120%Feb 1995-Jul

199730 Months

+140%Sep 1998-Feb 2000

15 Months

+260%Apr 2003-Oct

200743 Months

-42%Oct-Dec 1987

3 Months

-27%Apr-Jun 1989

3 Months

-38%Jan 1994-Jan 1995

13 Months

-55%Aug 1997-Aug 1998

13 Months

-55%Nov 2007-Jan 2009

15 Months

-50%Mar 2000-Mar 2003

33 Months

Russia and Tequila Crisis

Global Economic Recession/Deflation in Hong Kong

Black Monday

Financial Crisis in China

Global Financial Tsunami

Asian Financial

Crisis

June 2010 -

Any Clear Trend in DJIA Index since 1990?

Persian Gulf War

90’s Bull Period

Asian Crisis

Collapse of LTCM & Russia

Tech Bubble Burst

Tech Boom

911 Attack

Asset Price Collapse Corporate Scandals

West Coast Strike

US vs Iraq

Source: Bloomberg (December 2005)

June 2010 -

DJIA Index since 1990

Source: Bloomberg (December 2005)

June 2010 -

BRIC Long Term Performance (2) MSCI Russia Index


June 2010 -

BRIC Long Term Performance (2) MSCI Emerging Market India Index


June 2010 -

BRIC Long Term Performance (2) MSCI Emerging Market China Index


June 2010 -

Constant Proportion Portfolio Insurance

Objective:

The CPPI is a strategy designed to ensure that a fixed minimum return is achieved at a set date

in the future while optimizing the exposure to a risky asset during all the life of the product

How:

The Principal protection is achieved by adjusting the exposure such as after a maximum

expected loss, the portfolio is still able to buy the zero coupon which will ensure the protection

The strategy involves continuously re-balancing the portfolio of investments during the term of

the product between risky assets (equity) and safe assets (money market)

If market goes up, the exposure to the risky asset will raise and in the meanwhile if the market

goes down, the exposure to the risky asset will be lowered

June 2010 -

CPPI TerminologyCPPI: Constant Proportion Portfolio Insurance also known cushion management

Risky or Dynamic Asset: exposes the product to one or more markets in order to generate the required return. The risky assets may have a fixed composition or can be actively managed

Risk-free Asset: invested either in money market assets (to guarantee the liquidity of the placement and the requisite level of capital protection) or in a zero coupon bond with the same maturity as the guarantee

Cushion also called the Distance: Difference between the value of the product at a given time and the present value of the next guaranteed amount. This is the maximum amount that can be “lost” without jeopardizing the guarantee

Loss parameter: maximum possible loss of the Risky Asset between 2 trading days of this underlying (fixed by the guarantor)

Multiple: (1/ Loss parameter), is the ratio of exposure to the cushion

Exposure: Percentage of the portfolio invested in dynamic assets (= Cushion/loss parameter)

Present value of

the guarantee

Fees

Cushion

Amount of next

guarantee

Discounting at risk-free rate

t : date of the risk measurement

T : date of the next guarantee

Value of the product

The cushion and therefore the exposure to the dynamic asset depends on :

The level of the guaranteed NAV

The actual NAV resulting from the past return of the dynamic asset

The remaining period of time until the next guarantee date

The level of interest rates

June 2010 -

Cushion Method

The CPPI is based on an algorithm very simple:

To achieve a given level of capital protection at a certain maturity the portfolio is divided in

two segments:

• The ‘Risky Asset’: its value can go down

• The ‘Risk free Asset’: its value cannot go down (deposits) or its value at maturity is fixed (bonds for that specific maturity)

The present value of the guarantee at maturity is calculated. By definition this is the

minimum value that the portfolio must have at the time of the calculation if you want to be

100% sure to be able to deliver the guarantee at maturity.

You then calculate the difference between the portfolio value and that required minimum

value (the Distance).

You then simply allocate X times that Distance to the risky assets (where X is a mutliple),

the rest (if any) stays in non-risky assets.

June 2010 -

Illustrating of Dynamic Management Exposure

Value of the portfolio

€100

4% increase of the dynamic asset in T+1*

At inception, loss parameter of the dynamic asset = 25% and 5y rate = 4.5%Steps:1) PV Guarantee = 100 % / (1+4.5%)5 = 80.2%2) Cushion = NAV – PV guarantee = 100-80.2 = 19.83) Mutliple = 1/ loss parameter = 1/25%= 44) Exposure to risky asset = 19.8*4= 79.25) Unrisky asset = NAV – expo risky = 100-79.2= 20.8

Value of the product€ 103.2

Risk free Asset value € 11.2

Value of the Dynamic Asset

€92

Value of the product€ 96.8

Risk free Asset value € 30.3

Value of the Dynamic

Asset €66.5

4% decrease of the dynamic asset in T+1*

* Hypothesis: the zero coupon rate is stable

Risk free asset value€ 20.8

Value of the Dynamic

Asset€ 79.2

Present value of the

guarantee € 80.2

Cushion€19.8

Present value of the guarantee

€ 80.2

Cushion€ 23

Present value of the guarantee

€ 80.2

Cushion€16.6

June 2010 -




portfolio rebalancing strategiesPortfolio Rebalancing 104

Please make sure whether you know the parameters and the preferred habitat for constant-mix strategyPortfolio Rebalancing 105

Please make sure whether you know the parameters and the preferred habitat for CPPI strategy

Learning Outcome 5

June 2010 -

Asset allocation can be an active process in varying degrees or strictly passive in nature

Whether an investor chooses a precise asset allocation strategy or a combination of different strategies depends on that investor's goals, age, market expectations and risk tolerance

Keep in mind, however, that this training gives only general guidelines on how investors may use asset allocation as a part of their core strategies

Be aware that allocation approaches that involve anticipating and reacting to market movements require a great deal of expertise and talent in using particular tools for timing these movements

Some would say that accurately timing the market is next to impossible, so make sure your strategy isn't too vulnerable to unforeseeable errors

Conclusion

June 2010 -

Q & A

Portfolio Rebalancing Theory and Practice · Portfolio Rebalancing Theory and Practice Mr Chris...

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