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Finance Dictionary and Glossary of Investment Terms
Constant ratio plan
aintaining a predetermined ratio between stock and fixed income investments through regular adjustments of distribution of funds into different investments. See: formula investing.
An investment strategy in which the portfolio's composition by asset class is maintained at a certain level through periodic adjustments. When the balance is upset, it is periodically restored by moving money from overperforming assets to underperforming ones. This system prevents one asset class from dominating the portfolio. This is one way to maintain a desirable asset allocation.