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Formula sheet/NISM Series V-A: Mutual Fund Distributors/Investment Landscape
[ INVESTMENT LANDSCAPE ]

Strategic Asset Allocation & Rebalancing Deviation

Current Asset Weight(%)=(Current Value of Asset Class/Total Portfolio Value)×100\text{Current Asset Weight} (\%) = (\text{Current Value of Asset Class} / \text{Total Portfolio Value}) \times 100
Rebalancing Trade=Target Allocation(in Rs)−Current Asset Value(in Rs)\text{Rebalancing Trade} = \text{Target Allocation} (\text{in Rs}) - \text{Current Asset Value} (\text{in Rs})
Variables

Passive Breach Rebalancing Timeline: Mandated rebalancing within 30 business days across all open-ended schemes (except Overnight Funds, Index Funds & ETFs).

Exam note

Rebalancing enforces the discipline of systematically booking gains on outperforming assets and buying underperforming assets.

Worked examples
Inflation-Adjusted Future Goal Value Calculation

A client wants to provide for her 8-year-old daughter's higher education, which is estimated to cost Rs 50 Lakhs in today's terms. The daughter will enter college 10 years from now (at age 18). If the expected education inflation rate is 8.0% p.a., calculate the future required corpus.

Asset Allocation Rebalancing Trade Execution

An investor establishes a 50:50 Strategic Asset Allocation between Equity and Debt with Rs 10 Lakhs in each (Total = Rs 20 Lakhs). Over 1 year, Equity appreciates by 20% while Debt declines by 5%. Calculate the new asset allocation and the exact rebalancing trade needed to restore 50:50.