Part 4 Continued

In this continuation of the analysis of “Classic”  (65%/35%, 50%/50% and 35%/65%) US Equity/US Bond Portfolios selected from the Feynman Asset List, I examine the impact of re-balancing to bring Asset weightings back into line with the Strategic Asset Allocation (SAA) Plan.

Since the member Poll was equally divided between using a 10% (Plan A) and 20% (Plan B) deviation from the SAA Plan allocations, I chose to split the difference and use a 15% deviation limit. Since applying a 15% deviation limit to a 65% asset allocation group results in ~28% deviation in the complementary 35% asset allocation group this provides a reasonable range of re-balance options.

The analysis shows that there are benefits to re-balancing, but there are subtleties in the details.

The analysis also addresses whether there is a “best” SAA Plan and whether there are benefits to “optimization” (as discussed in Part 3 of this Study) compared with “Classic” SAA Plans.

The following material and links are limited to Platinum members and are not permitted to be published elsewhere on the Internet.

The Word document report can be downloaded here.

For those members interested in the details of the re-balancing, these results are provided in Appendix 3, downloadable here.