Drift (Portfolio)

View Financial Glossary Index

Definition

Is an indicator for the deviation of your portfolio’s holdings from their target weightings. Drift occurs as individual securities in your portfolio appreciate or depreciate in value and vear off of their original allocations over time. For instance an asset that started with a 5% holding can eventually make up much more than 5% of a portfolio if it’s returns have considerably outperformed other assets.

A higher value means there is a larger deviation from the portfolio’s actual waiting and the target weighting and it’s probably time to rebalance your portfolio!


Drift is calculated as the absolute value of the security's difference from the initial weight given to the position and the actual weighting divided by 2.

Formula

Difference = absolute value ( target weighting - actual weighting )

Drift = ( Security 1 difference + Security 2 difference + … Security n difference ) / 2

Are you an investing professional?

Click here to request a live demo of YCharts Professional, our premium suite of tools and data.
Learn more about our professional products. Call (866) 965-7552 or email sales@ycharts.com

Advertisement

Related Terms

{{root.upsell.info.feature_headline}}.

{{root.upsell.info.feature_description}}

Please note that this feature is only available as an add-on to YCharts subscriptions.


Please note that this feature requires full activation of your account and is not permitted during the free trial period.

Start My Free Trial {{root.upsell.info.call_to_action}} No credit card required.

Already a subscriber? Sign in.