It doesn’t seem to make any sense at first, but rebalancing is used by portfolio managers all over the world to manage risk and boost returns.
Financial Planning
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Risk Warnings & Disclaimers
Capital at risk. Past performance is used as a guide only. It is no guarantee of future returns. Different funds and asset classes carry varying levels of risk depending on the geographical region and industry sector. You should make yourself aware of these specific risks prior to investing. This video does not constitute personal advice. We do not take any responsibility for third party websites and content we may link to from this video. Issued on behalf of Nova. Nova is a trading name of Nova Wealth Ltd, which is authorised and regulated by the Financial Conduct Authority (FRN: 778951) and is a limited company registered in England & Wales (10739796).
Data used in this video:
Historical Asset class returns
http://awgmain.morningstar.com/webhelp/FAQs/What_assumptions_goalplans.htm
Northern Trust risk adjusted returns
https://www.northerntrust.com/united-kingdom/insights-research/2020/wealth-management/rebalancing-strategic-portfolios
Vanguard Portfolio Drift
https://investor.vanguard.com/investing/portfolio-management/rebalance
Other reading:
How rebalancing works for Index Investors - https://breakingthemarket.com/why-market-index-investing-works/
00:00 Intro
01:59 Risk vs Return
03:54 Diversification
08:14 Stocks & Bonds
10:45 Within Stocks
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