Building a portfolio
Drift
How far your actual weights have moved away from the weights you intended to hold.
How it works
Drift is the gap between plan and reality, measured per holding or per asset class. It accumulates silently, because it is caused by prices moving rather than by anything you did.
Measuring it is what turns an allocation from an aspiration into something you are held to. Without the number, the portfolio slowly becomes whatever the market made it.
Where it misleads people
Drift is usually largest in the holdings that have done best, which is exactly where it feels least urgent to act. That asymmetry is the whole reason a written band helps.
Formula
Drift = current weight − target weight, in percentage pointsWorked example
A target of 52.3% in direct equities against a current 54.7% is a drift of +2.4 points — inside a ±5% band, so no action required.
Related terms
- RebalancingSelling what has grown and buying what has lagged, to return the portfolio to its target mix.
- Rebalancing bandHow far a holding is allowed to drift from its target before you act.
- WeightHow much of your portfolio one holding represents, as a percentage of the total value.
- Asset allocationHow you divide money between asset classes — the decision that drives most of your long-run experience.
Mentioned in
More in Building a portfolio
- Effective number of holdings
- Covariance
- Efficient frontier
- Correlation
- Fund overlap
- Core and satellite
- Glide path
- Concentration risk
All 20 Building a portfolio terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.