Re-Balancing A Global Policy Benchmark: How To Profit From Necessity
- Topics:
- Commercial Lending
- Tags:
- Asset,
- Asset Class,
- Asset Management,
- Business Operations,
- First Quadrant,
- Operational Planning
- Source:
- First Quadrant
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Overview: The need to rebalance institutional assets to a policy benchmark is a simple fact of life. It may be possible for an investor to allow his portfolio to drift. But over a period of time, he will eventually have to address the misallocation this causes, as the portfolio drifts to an increasingly concentrated mix, overexposed to the riskier asset classes and underexposed to the more conservative asset classes. Many investors may choose to rebalance the asset mix by systematically directing new money into the underweight asset classes or by choosing the overweight asset classes as a source for withdrawals. However loosely the constraints on active moves away from policy benchmark are defined, the fact remains that a fund’s assets and liabilities must appropriately balance; drifting too far from the policy benchmark can prove disastrous when markets fail to deliver what one has been conditioned to expect.
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Format: PDF | Size: 295KB | Date: Jan 2002 | Pages: 19
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