In percentage of portfolio rebalancing if one asset exceed threshold, do we adjust other asset classes weights also back to target weight ?
No I wouldn’t imagine so, this is a constant monitoring approach so I think it would only be on a case by case basis to instantly get the asset class back in its threshold.
yes you would
all of the asset classes would be readjusted back
At the time of monitoring, all asset classes outside of their corridors are rebalanced. This can be done by buying or selling more of the asset classes that are _ outside _ their corridor to a level within the corridor.
Whereas technically possible, it would be impractical to buy or sell the other asset classes that are _ within _ their corridors to rebalance the entire portfolio.
I assume a rational investor would choose the first approach, as this would reduce trading costs if we assume a minority of the asset classes are outside their corridor (especially in large portfolios).
Exactly, I was looking at the comments under mine and thought I was going mad! You more eloquently put what I meant lol.