TY - JOUR T1 - Rebalancing a Global Policy Benchmark JF - The Journal of Portfolio Management SP - 9 LP - 22 DO - 10.3905/jpm.2002.319828 VL - 28 IS - 2 AU - Lisa M. Plaxco AU - Robert D. Arnott Y1 - 2002/01/31 UR - https://pm-research.com/content/28/2/9.abstract N2 - The need to rebalance institutional assets to a policy benchmark is a simple fact of life. While it may be possible for investors to allow portfolios to drift over a period of time, they will eventually have to address the misallocation this causes, as the mix becomes increasingly concentrated, overexposed to the riskier asset classes and underexposed to the more conservative asset classes. Some investors may 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. Others may choose to rebalance on a quarterly basis, before they are called upon to report to their investment committee. However loosely the constraints on active moves away from policy benchmark are defined, the authors argue that 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. ER -