A Rebalancing Act To Protect Your Portfolio

If you started off last year with a carefully constructed asset-allocation plan for your mutual funds, you now may notice something is out of whack. Say you chose to apportion 70% of your fund portfolio to stocks and 30% to bonds. The huge runup in stock prices likely increased the equity component dramatically, thus raising your risk. Similarly, if bond prices rose, you would be susceptible to higher risk levels. Both scenarios can wreak havoc on your asset ratios.

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