Rebalancing Through Market Drawdowns

Executive Summary

• Although investors may be reluctant to add to higher-risk exposures in a market drawdown, we believe it is essential to maintain a prudent rebalancing approach.

• Our analysis of historical and simulated market drawdowns suggests that rebalancing potentially improves outcomes relative to a non-rebalanced portfolio.
• We believe investors should select the rebalancing rule that they think is most appropriate and adhere to it through all periods, including market drawdowns.

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