WHITE PAPER - Managing sequencing risk - Buckets v Rebalancing

Abstract

Many advisers and their clients use strategies that will avoid taking distributions from asset classes like equities during down years. A popular strategy is simply to establish a series of decision rules and a bucketing strategy that dictate that equities will not be sold in certain circumstances. However, rebalancing a portfolio acts as a tool to ensure that only the investments that are up are sold, and that the investments that are down are actually bought as well.  These two strategies are compared with the conclusion that decision-rules bucketing strategies, when implemented along with rebalancing, results in the same outcome for the portfolio.

Access fee

  • Non-subscribers - $40 for three-month access
  • Full Radar subscribers – free