We argue that active asset allocation can add value to your portfolio. Market timing is not easy, but research shows that adjusting the exposure by rebalancing and you can add longer-term value.Goal of assets Last week, we made an active trade using passive indexes overtly making a conscious bet on what type of stocks will perform best looking forward. This is not market timing, this is thoughtful rebalancing exposure to take advantage of an extreme situation within our goals for the portfolio.
In 2022, the average stock did better than the market cap weighted stock . Essentially, large cap technology was the major difference as was exposure to energy. For equal weight, we are using the Russell 1000 ETF and the Russell 2000 Index . Last week we rebalanced by selling half our S&P 500 market cap weighted index and bought the equal weight S&P 500 index . We have highlighted the rebalancing trades we did between these two passive indices since late 2021. These simple rebalancing trades added about five per cent to returns from Dec. 21 to May 22, a little more than one per cent on the two trades from May through October, and over six per cent from October 22 until last week.