Therefore, differences in asset allocation will be the key factor over time causing differences in portfolio performance. Use our online Asset Allocation Worksheet to help you determine an allocation consistent with your investment policy. Top of Page Monitoring Conditions Investment decisions are made in a dynamic marketplace where change occurs on a continuing basis. Key macro variables such as inflation and interest rates, should be tracked on a regular basis. Even the most carefully constructed portfolio is not intended to remain intact without change.
Portfolio managers spend much of their time monitoring and rebalancing existing portfolios.
The cost of trading involves commissions, possible impact on market price, and the time involved in deciding to trade. The cost of not trading involves holding positions that are not best suited for the portfolio s owner, holding positions that violate the asset allocation plan, holding a portfolio that is no longer adequately diversified. Portfolio construction involves the selection of securities to be included in the portfolio. Top of Page Mutual Funds Overview Many financial planners use mutual funds in constructing client portfolios. A mutual fund is an investment company that pools investors money to invest in securities.