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Portfolio planning, construction, and rebalancing basics

Portfolio management / portfolio construction · Lesson 4 of 4

Lesson 4 of 4

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Lesson 4 of 4 · Portfolio management / portfolio construction

Portfolio planning, construction, and rebalancing basics

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Explain how investment objectives and constraints guide strategic asset allocation and overall portfolio construction.
Distinguish between strategic asset allocation and tactical asset allocation and describe the role of active versus passive implementation choices.
Describe major asset allocation approaches and basic portfolio construction considerations, including concentration, diversification, and benchmark orientation.

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Explain the purpose of rebalancing and the trade-offs among risk control, transaction costs, tax effects, and investor discipline.

Compare time-based, threshold-based, and hybrid rebalancing approaches and determine when each is most appropriate.

Evaluate the effects of market movements and cash flows on portfolio weights and recommend appropriate rebalancing actions consistent with policy targets.

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