Anonymous
% in portfolio, do we refer to cost of buying price or current value of the stock?
If value, does it mean to maintain the % of the stock in my portfolio, say A and B, 70% vs 30% for the cost i bought. If B increased in value and exceed the 30%, does it mean I should either buy more A or sell some B to hit 70% vs 30%?
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Aidan Neo
12 Nov 2020
Financial Services Consultant at Manulife Financial Advisers
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Yes you are correct, the % refers to the total value of the portfolio. Eg ark etfs sold some of their tesla shares not because they felt something was going to happen but rather to maintain the initial % allocation aka rebalancing.
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Most of the times, it refers to the current value. Like you have clearly stated, it will help investor to notice which stock is performing and therefore making a more informed decision to execute rebalancing to avoid over-exposure on a certain stock which you may not be able to stomach the volatility in an unfortunate event.