Rebalancing Strategies for Portfolio Management

Mark and Susan are a married couple in their early 50s looking to optimize their investment portfolio as they approach retirement in roughly a decade. They have a diversified portfolio primarily comprising various equities, bonds, and alternative investments. Given the dynamic market conditions and their evolving risk tolerance, Mark is considering a rebalancing strategy that involves more frequent adjustments to the portfolio weights based on market volatility and changing asset class correlations.

In a recent meeting with their financial advisor, they discussed the potential strategies. Three approaches were introduced: a constant mix strategy, a buy and hold approach, and a tactical asset allocation strategy. Each method has distinct implications for risk management and investment performance.

As they want to ensure that any implementation of these strategies aligns with their financial goals and risk profiles, they are puzzled which strategy might be the most effective for their circumstances.