Loading...
CFA Level 1
Portfolio Management

Purpose of Rebalancing in a Portfolio

Very Easy Investment Policy And Allocation Rebalancing

Rebalancing is an essential part of portfolio management, ensuring that an investor's portfolio aligns with their desired asset allocation over time. An investor has a target allocation of 60% equities and 40% bonds. After a year, the equity portion has grown significantly, now representing 70% of the total portfolio. What is the main purpose of rebalancing in this context?

Hint

Submitted14.9K
Correct11.0K
% Correct74%