What type of investment strategy involves a fixed split between stocks and bonds?

The constant-mix strategy is designed around maintaining a predetermined fixed allocation between stocks and bonds. Under this approach, investors routinely rebalance their portfolio to maintain this fixed ratio, regardless of market fluctuations. For instance, if an investor has established a 60% stock and 40% bond allocation, they would buy or sell shares of these assets to bring the portfolio back to this ratio whenever the values change due to market movements.

This strategy is particularly appealing to investors who seek to manage risk while still participating in potential market gains. The rebalancing process helps to lock in gains from the over-performing asset class and mitigate losses from the under-performing one.

In contrast, dynamic allocation involves adjusting asset allocations in response to changing market conditions or valuations, rather than maintaining a fixed ratio. Market timing strategies focus on predicting future market movements to enter or exit investments at optimal times, and opportunistic strategies look for specific opportunities that can provide higher returns, often deviating significantly from traditional asset allocation approaches.