bkballa

mik82 Wrote:
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> So if volatility is high, chances of moving
> outside the corridor are higher. Setting a
> narrower corridor would force more frequent
> rebalancing, hence more transaction costs (taxes,
> commission etc), underperformance. So why set is
> narrower?


Remember the strategic asset allocation?

The investor wants exposure to a controlled systematic risk. What will happen to a foundation, that can take risk, suddenly discover that its target 70% exposure to equities is now 45%?