Tracking End-of-Month Re-Balancing

The video discusses the impact of market rebalancing and window dressing on asset allocation, particularly in the context of a recent market sell-off. It highlights how pension funds and money managers are adjusting their equity holdings to meet mandates, using Norway's sovereign wealth fund as an example. The video also explores varying estimates from financial institutions on the amount of equities to be added, ranging from $200 billion to $1 trillion. Historical trends suggest minimal impact from rebalancing, but current low liquidity could amplify effects. The video concludes with potential market and currency impacts, including a possible 3% increase in equities and a boost for the dollar.

Why do pension funds and money managers need to rebalance their portfolios?

• To meet specific asset allocation targets

• To comply with new regulations

• To reduce their exposure to equities

• To increase their cash reserves

What is the current equity allocation of Norway's sovereign wealth fund after the sell-off?

• 70%

• 65%

• 75%

• 60%

Which bank estimates the highest amount of equities to be added?

• JP Morgan

• Saxo Bank

• Deutsche Bank

• Goldman Sachs

What is the typical impact of rebalancing on equities near quarter and month end?

• Significant decrease

• Minimal impact

• Significant increase

• No impact

How might the rebalancing affect the US dollar?

• It could weaken the dollar

• It could strengthen the dollar

• It will have no effect

• It will cause the dollar to fluctuate wildly