If Uniswap doubled in price due to some announcement or event while the other automatic rebalancings in the index remained flat, then its weighting would increase from 25% to about 40%. Because of this one move, the portfolio of assets is now significantly more concentrated than intended. If Uniswap subsequently underperforms the remaining bucket of assets, then the $DPI would also underperform relative to its stated goal.
Should I automate my investments?
Arguably, putting your investments on autopilot is the most important thing you can do for your finances. If you don't want to automate the rest of your finances—if you prefer to set aside a few hours a month to pay bills, transfer money to savings, and balance your checkbook, that's fine.
https://www.beaxy.com/ is the process of restoring the ratio of stocks, bonds and other assets when gains or losses move them out of alignment with the original portfolio design. Until recently, rebalancing was done manually by investors, usually based on the recommendations of a financial advisor. If you ignore your investments for too long, you may find that your actual investment mix has drifted far from your intended asset allocation. Rebalancing is when you buy or sell investments to bring your asset allocation back in line with your targets. Though not every expert thinks it’s essential, rebalancing helps you avoid taking on too much risk or trading on emotions––which are always good things. You open a portfolio and invest your money… and then go on living your life, eating tacos, forgetting the account even exists.
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There are even hybrid investing platforms like Farther that use daily rebalancing, while also giving you access to a dedicated financial advisor. We all know that markets go up and down, and the investments in your portfolio will change in market value. The benefit of built-in rebalancing means that you can passively hold an Index Coop product knowing that the asset allocation methodology will be followed. Theoretically, this leads to better performance relative to a non-rebalancing portfolio, reduces the potential of being over-exposed to a single asset, and makes getting exposure to a crypto theme more accessible than ever. As an added benefit, gas costs for rebalancing are handled by Index Coop and Set, helping to maximize the end-user’s return. Rebalancing is important because over time, based on the returns of the specific assets held in the portfolio, the asset weightings will change, altering the risk profile of the portfolio of assets.
3/ The article explains what @steakhut_fi is, focusing on SteakHut Liquidity, offering automatic rebalancing pools on top of the @traderjoe_xyz LB.
This results in incredible returns, with the new $AVAX – $USDC pool currently providing 152.52% APR on deposits! pic.twitter.com/QZgeXAdeRL
— harry.avax