Portfolio rebalancing not only keeps the asset allocation true to the clients' original goals, it also delivers better returns over the long term.
Source: Mackenzie Investments and Globe HySales. From August 31, 1986 to September 29, 2006. The illustration shows two hypothetical portfolios with initial investments of $40,000 distributed equally across four indexes. Canadian equities are represented by the S&P/TSX Total Return Index, Canadian bonds by the Scotia Capital Universe Bond Total Return Index, US equities by the S&P 500 Composite Total Return Index ($CDN), and Global equities by the MSCI World Index ($CDN). The first portfolio is not rebalanced. The second portfolio employs a rebalancing range of 3% and a semi-annual rebalancing frequency (December 31 and June 30). The rebalanced portfolio also assumes that each index is rebalanced to the 25% target if any one of the components exceeds 28% or drops below 22% of the portfolio allocation. All rebalancing (selling and buying) is done on a tax-deferred basis. Neither of the portfolio illustrations take into account any tax consequences that could be incurred by an investor over the 20-year period. Neither illustration takes into account any fees that an investor may pay.Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Rebalancing transactions may trigger tax consequences for investors. Mackenzie makes no representation or guarantee regarding the asset allocation of an investor’s portfolio.
