What is Rebalancing and How Does It Work?
Over time, the securities in your portfolio may deviate from their target allocation due to varying rates of return in different segments of the market. This deviation—referred to as "drift"—means that some securities will become overrepresented, while others will become underrepresented relative to their target weights.
Rebalancing is the process of correcting this drift by bringing the portfolio’s allocations back to their target levels. This is achieved by selling securities that have grown too large (i.e., exceeded their target allocation) and buying those that have fallen below their target allocation.
Threshold for Rebalancing:
Your Corex portfolio will only be rebalanced when the drift in allocation exceeds a predetermined threshold. This threshold ensures that rebalancing occurs only when necessary, preventing excessive trades or unnecessary transaction costs.
Risk Profile and Portfolio Management
Corex determines your risk profile (which reflects the level of risk you are comfortable with), based on the personal information you provided, including but not limited to:
- Investment objective (e.g., growth, income, or capital preservation)
- Time horizon (the length of time before you may need access to your investment)
- Risk tolerance (your ability to withstand fluctuations in your portfolio's value)
- Financial circumstance
- Investment knowledge
- Attitude toward risk
This risk profile helps Corex with the construction and ongoing management of your portfolio to ensure it aligns with your financial goals.
Important Notes Regarding Portfolio Management
- Portfolio management activities such as rebalancing, adjustments to asset allocations, or decisions regarding buy/sell transactions are managed by Corex in accordance with your risk profile.
- Manzil provides consultation services related to Shariah compliance but does not directly manage the portfolio or make investment decisions. Corex is a registered Portfolio Manager and is therefore the entity responsible for managing your portfolio, making decisions on your behalf, and handling rebalancing according to your provided risk profile and financial goals.
Disclaimer:
Rebalancing aims to maintain the portfolio in alignment with your risk profile and investment goals. However, Corex does not guarantee returns, and all investments carry inherent risks, including the risk of loss.
Your capital is at risk with any type of investment. The value of your portfolio can increase or decrease. Past performance is no guarantee of future results. An investment may be risky and may not be suitable for an investor's goals, objectives, and risk tolerance. The value of investments and the income derived from investments will fluctuate and can go down as well as up. A loss of principal may occur.
Corex Financial Inc. ("Corex") offers wealth management products and services to Manzil customers. Corex Financial Inc. is a registered Portfolio Manager in each of the provinces and territories of Canada and as an Investment Fund Manager in the provinces of Alberta, Ontario, Newfoundland and Labrador, and Quebec. Assets in your Corex accounts are held with various custodians, each registered as an investment dealer with the applicable securities regulators. All custodians are members of the Canadian Investment Regulatory Organization (“CIRO”) and the Canadian Investor Protection Fund (CIPF). All trademarks are the property of their respective owners. Corex will determine what investments are suitable for you.
