Question: Portfolio managers that use a model - based approach must keep in mind portfolio drift. This means that: An investment strategy is no longer suitable
Portfolio managers that use a modelbased approach must keep in mind portfolio drift. This means that:
An investment strategy is no longer suitable because securities have now become overvalued.
Models need to account for strategic allocation portfolio changes in the future.
The prices of the securities in the portfolio change; resulting in the weights of these securities moving away from target weights.
The portfolio has securities that drift outside of the target strategy because those positions no longer are the best companies for the client.
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