If a market is erratic but general uptrend, which strategy performs best? CPPI or Constant mix?
The answer in the book said constant mix, but I thought if it was upward trending CPPI would be better, where constant mix is best in flat but oscillating markets. Any thoughts?
Also if you goal is to minimize transactions cost and the need to monitor the portfolio which approach is best?
A. % of Portfolio
B. Calendar Rebalance
C. Mix
The answer was mix. I unerstand from a monitor stand point that calendar is better, but how is % of portfolio better? Won’t the cost be more than calendar? Could this be a mistake?