The recommended weightings of assets in a new investment portfolio is termed the Strategic Asset Allocation. Initially, the composition of the portfolio will reflect the Strategic Asset Allocation, however with time the weighting of assets in the portfolio will change either as some assets outperform others, or because of the impact of additional cash contributions into the portfolio.

Rebalancing is the process by which a portfolio that has materially changed from the original asset allocation is re-adjusted toward the Strategic Asset Allocation.

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