Analyste de Boston

How Rebalancing Added Over 2% to the Returns of a Simple ETF Portfolio

I think it's somewhat misleading to say 'over the last 12 months, our rebalancing added 2-3% to client returns.' First, we've had to extraordinary cycles Bear & Bull that necessitated rebalancing if that's in your mandate. You likely rebalanced sometime in the BEAR (10/9/07-3/9/09) costing your clients >2-3% return, and if you rebalanced AFTER June your client likewise 'lost' potential upside gains. So a 12 months snapshot (here) is as meaningless as an annual or quarterly rebal, and not demonstrably "better."

Cookie-cutter asset allocation models with auto-rebalancing in any time-frame all failed to protect investors and cost them a fortune! (I designed such lifestyle models for institutional clients, over $2 bln was invested in 2007.) The average long-term 2020 investor is still DOWN -14% from 10/9/07, where s/he was 12 months ago is less significant.

I've personally favored strategic models for private investors since 2005, but that's a more complicated, labor-intensive & expensive value-proposition to sell to institutions and retail investors.

My Long Term/Growth Portfolio is UP +76% since the Bear Mkt began through 10/12/09. "Diversified strategic allocation" is the way to go!