Chartered Investment Manager (CIM) Practice Exam · Question
A client's portfolio has drifted significantly from its original target asset allocation due to differential asset class performance. What strategy would typically be employed to bring the portfolio back into alignment?
Portfolio rebalancing involves adjusting the asset allocation back to its target weights. This usually means selling assets that have performed well (and are no
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Question: A client's portfolio has drifted significantly from its original target asset allocation due to differential asset class performance. What strategy would typically be employed to bring the portfolio back into alignment?
Answer options: ✅ Rebalancing
- Tactical asset allocation
- Market timing
- Concentration
Correct answer: Rebalancing
Explanation: Portfolio rebalancing involves adjusting the asset allocation back to its target weights. This usually means selling assets that have performed well (and are now overweight) and buying assets that have underperformed (and are now underweight).
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