Duke’s Campbell Harvey Tallies Cost of Portfolio Rebalancing at $16 B

 

• Front-running by likes of hedge funds seen hurting investors
• Pension managers are aware of the risk but largely stay put

It’s an open secret in this need-for-speed era on Wall Street: Investors, who adjust their stock-bond portfolios like clockwork on regular schedules, are at the mercy of front-running by fast-money speculators.

Now, a group of academics claim they’ve put a price tag on the resulting cost to pension funds and other market participants known for their rebalancing activity: $16 billion a year.

https://www.bloomberg.com/news/articles/2025-02-05/duke-s-campbell-harvey-sees-16-billion-cost-on-dumb-rebalancing