Percentage of portfolio rebalancing

[rodra333]

if we have a strategic asset allocation weight of 73% with corridor width +/-4% and at june 30 the current allocation is 71%.
The question is what would be the weight allocation on July 1st?
My thought is that since the corridor have not been breached the weight coul remain at 71%.
Any thoughts?

 

[MrSmart]

If there is no calender rebalancing, it should be right.

 

[cook29]

If other assets in the portfolio are out of strategic ranges, I think all assets would be brought back to strategic weights. However, if not, then I believe you are corrrect.

 

[MrSmart]

cook29 wrote:
If other assets in the portfolio are out of strategic ranges, I think all assets would be brought back to strategic weights. However, if not, then I believe you are corrrect.

The trigger on one asset resets them all?
I guess you’re right. Oversaw the maths behind it.
It’s scary how much you still learn before the exam!

 

[cook29]

MrSmart wrote:

cook29 wrote:
If other assets in the portfolio are out of strategic ranges, I think all assets would be brought back to strategic weights. However, if not, then I believe you are corrrect.

The trigger on one asset resets them all?

Yes, I believe so. Ran into this on a scwheser mock.

 

[cokemicho]

cook29 wrote:
If other assets in the portfolio are out of strategic ranges, I think all assets would be brought back to strategic weights. However, if not, then I believe you are corrrect.

+1 since you dont know how many else asset classes your portfolio holds and in how much weight they changed. There was a mock question or a question somewhere which fools you that way

 

[S666]

Yeah if you have multiple asset classes and only one if them breaches the corridor, they all get reset back to policy weight…. If you only have 100% to play with, the math suggests that should be the case. If you’re reducing allocation to one class, you have to by definition add it somewhere else and vice versa.

 

[Zeeshan Shafi]

cook29 wrote:

MrSmart wrote:

cook29 wrote:
If other assets in the portfolio are out of strategic ranges, I think all assets would be brought back to strategic weights. However, if not, then I believe you are corrrect.

The trigger on one asset resets them all?

Yes, I believe so. Ran into this on a scwheser mock.

2010 AM as well.