It is important to create a formal rebalancing
policy and follow it faithfully in order to keep
assets on original targets.
between top and
Given the wide array of approaches available, mutual funds and ETFs in the same category may deliver vastly dIfferent results
Compounded over time, this gap can have a big impact on a portfolio’s dollar value.
How much risk are they willing to take?
investment is key
Of the 4 Ps, focus most closely on performance. But evaluating performance involves much more than simply looking at recent returns.
Other factors to consider include consistency, risk and performance relative to benchmarks and peers.
LARGE CAP VALUE
When will you need
to stay the course
As markets shift, so do allocations. Without
rebalancing, investors overtime can become
overexposed to unwanted risks.
Rebalancing according to a set schedule
helped maintain the 60-40 allocation
There are many factors to consider
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CHOOSING THE APPROPRIATE
INVESTMENT IS KEY
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on a well-diversified
portfolio, over the
past 15 years.
Begin at the end—What’s the goal?
to smooth out
with an asset
The whole is greater than the sum of its parts
What is your risk
USE THE 4Ps
What is the strategy trying to achieve?
Over a 20-year period, the 60-40 portfolio
left untouched drifted to become a 73-27% portfolio
In the last 15 years, investors endured multiple natural
disasters, numerous geopolitical conflicts and two major
Through it all, a well-diversified portfolio of stocks, bond
and other uncorrelated asset classes delivered one of the
smoothest ride for investors.
START WITH AN ASSET
PUT IT ALL TOGETHER
DIVERSIFY TO SMOOTH
OUT THE RIDE
USE THE 4 Ps FRAMEWORK TO
Stay on course; don’t “set it and forget it”
Who’s managing the strategy? What are
their experiences and capabilities?
REBALANCE TO STAY
What are your goals?
Create a rebalancing policy
What are they trying to accomplish?
Dig deeper into performance
How does this strategy try to pursue
objectives and invest shareholder money?
A portfolio should be a reflection of each investor’s goals:
When will they need the money?
To build a portfolio that can withstand ups and downs, all six components in the process must work together to achieve the desired result.
PUT PORTFOLIO CONSTRUCTION INTO PRACTICE.
When would this strategy likely
Big gaps between top and bottom performers
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