Constant Ratio Plan

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Dictionary Says

Definition of 'Constant Ratio Plan'

An asset allocation strategy in which assets are assigned a fixed percentage in a portfolio and readjusted to their target weights periodically. The readjustment allows the portfolio to remain properly weighted, and forces the sale of outperforming assets and purchase of underperforming assets. In a constant ratio plan, the manager must choose how often to rebalance the portfolio and weigh the tradeoff between the desire to frequently rebalance and the added transaction costs that will result.
Investopedia Says

Investopedia explains 'Constant Ratio Plan'

A constant ratio plan differs from buy-and-hold and momentum strategies. Buy-and-hold investors set one allocation and don't rebalance, while momentum investors sell underperforming assets and buy outperforming ones. A constant ratio plan performs best in a volatile market with a general mean-reverting pattern. For example, if the stock market is oscillating, a constant ratio plan will buy when stock prices fall and sell when they rise.
Search results for

'Constant Ratio Plan'

  • A formula timing plan which consists of periodic purchases of a ...

    http://www.investopedia.com/ask/answers/10/dca.asp
    a. Dollar cost averaging b. Share averagingc. Constant dollar pland. Constant ratio
    plan Answer: A“A” is correct because this is the definition of. ...

  • Investopedia

    http://www.investopedia.com/ask/ViewFAQPrintable.aspx?url=%2fask%2fanswers%2f10%2fdca.asp
    ... as: August 18, 2010 | Filed Under ». a. Dollar cost averaging b. Share
    averaging c. Constant dollar plan d. Constant ratio plan ...

  • Portfolio Management Pays Off In A Tough Market

    http://www.investopedia.com/articles/stocks/09/constant-mix-buy-hold.asp
    ... bonds and buys stocks to maintain the correct ratio. ... with retirement clients follow
    the constant-mix rebalancing ... hear the mantra "stick to the plan", which is ...

  • Choose Your Own Asset Allocation Adventure

    http://www.investopedia.com/articles/stocks/07/allocate_assets.asp
    ... the investment objective or spending plan is complete ... deviations versus
    price-to-earning ratio deviations can be ... 3. Constant Weighted Allocation A comparison ...

  • Having A Plan: The Basis Of Success

    http://www.investopedia.com/articles/pf/05/061005.asp
    ... If you are unable to stomach the constant volatility of the market, your objective
    is ... The risk component of a plan is very important and requires you to be ...

  • Strategies For Withdrawing Retirement Income

    http://www.investopedia.com/articles/retirement/08/systematic-withdrawal.asp
    ... Study each type of plan to determine whether one might be appropriate for your ... a
    certain period of time and the other to pay a constant payout ratio. ...

  • Reinvesting Capital Gains In Leveraged Portfolios

    http://www.investopedia.com/articles/stocks/07/reinvest_capital_gains.asp
    ... of assets and pays down debt in order to maintain the target leverage ratio. ... An argument
    could be made that constant leverage funds break the golden rule of ...

  • Using Feedback To Improve Your Trading

    http://www.investopedia.com/articles/trading/10/understanding-feedback-loops-trading.asp
    ... Haphazard trading and constant switching between different methodologies ... part of
    the trading plan, your confidence ... Trade P = Percentage Win Ratio Example: If ...

  • Undesirable Dividends

    http://stocks.investopedia.com/stock-analysis/2010/Undesirable-Dividends-MXIM-WSM-DOW-TRA-PBCT0322.aspx
    ... if all other variables are held constant, the stock ... Sonoma (NYSE:WSM) carries a ratio
    of 4185%. ... on current operations, an ongoing dividend plan is unsustainable ...

  • Investing In The ASEAN Region

    http://stocks.investopedia.com/stock-analysis/2011/Investing-In-The-ASEAN-Region-ASEA-IDX-EWM-EWS-THD-EPHE-VNM0707.aspx
    ... The numbers remained constant from a prior report even ... and energy stocks and charges
    an expense ratio of 0.76 ... strategies should realize a stop-loss plan must be ...

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