View the entire Frequently Asked Questions (FAQs)
What is portfolio drift?
Your portfolio's current investment mix may differ slightly from your target portfolio's, mainly because each asset class performs differently over time. Cash flows (such as deposits, withdrawals, and distributions) can also contribute. If left unmanaged, drift can change your portfolio's overall risk level. We monitor your portfolio and rebalance it periodically to minimise drift.
Growth/defensive drift
We track drift in the growth/defensive mix using a target allocation range.
If your portfolio's current allocation of growth (or defensive) assets is within the target portfolio's growth (or defensive) allocation range, growth/defensive drift is 0%.
If your portfolio's current allocation of growth (or defensive) assets is outside the target portfolio's growth (or defensive) allocation range, growth/defensive drift is the difference between the portfolio's current growth (or defensive) allocation and its target growth (or defensive) allocation range's nearest boundary.
For example, let's say the allocation range for growth assets is 40%-60%, and the corresponding allocation range for defensive assets is 60%-40% in the target portfolio. If the current allocation mix is 65% growth / 35% defensive, the drift for growth assets is 65% - 60% = +5%.
Drift of an asset class
The drift of an asset class is the extent to which your current weight for that asset class differs from the target weight for that asset class. Here,
A positive drift means the asset class is overweight; a negative drift means it is underweight.
Drift of portfolio
Portfolio drift is a measure of how far your portfolio's current asset-class weights have moved away from their target weights, calculated by summing the absolute differences between current and target weights across every asset class. Using absolute differences means one adds up the size of each deviation regardless of whether it is above or below target, so overweights and underweights don't cancel each other out.
Also read the answers to the related questions: