Our model portfolios each use multiple sub-strategies to control trading of long and short funds in various asset classes, a form of asset allocation.  One of the basic principals of all asset allocation strategies is periodic rebalancing.  Many of the mutual funds we use are leveraged and portfolio positions can get out of balance very quickly.  Because of this, we have adopted a policy of rebalancing at the beginning of each month.  All of the sub-strategies have up and down periods.  By rebalancing monthly we take a little money off the top when prices are high in the the better performing asset classes, and buy more shares when the prices are low in the underperforming asset classes.

On the first trading day of each month we recommend you look at your portfolio positions and if they are not approximately equal, make whatever changes are necessary to get them back in balance.  We provide a monthly "Rebalancing Spreadsheet" to assist you with the calculations.  You can download the latest one from our Download Library, however we email a new one to members at the end of every month.  The spreadsheet shows the exact dollar amount and the percentage allocated to each fund in our company account.  If you have been trading one of our models for more than a month, your percentage allocated to each fund should be fairly close to ours, if you rebalanced at the start of the prior month.  If you started trading within the past month, your portfolio allocations could be significantly different, but should be similar at the end of your second month, if you rebalance at the start of the month. 

When preparing your trades, keep in mind that the Money Market fund is a portfolio position, so if the model you are trading is currently holding two funds in addition to the Money Market fund, your goal is to end up with three approximately equal allocations.  You also need to take into consideration any new orders that are indicated for your model.  If you are new to trading at ProFunds or Rydex, you may wish to wait until a day when there are no other trades to confuse the issue.

There are several options when placing your trades.  You can use shares, percentages or specific dollar amounts, but using dollar amounts is probably easiest.  This isn't an exact science because by the time your trades have executed the net asset values will have changed.  It's not possible to get your allocations exactly equal to ours, unless we move all the positions to cash for one day.  For the model portfolio accounts, we will try to get the allocations as close as possible based on month end values.  However, we recommend that you use some discretion, especially if you are trading in a taxable account, as any extra trades you generate need to be accounted for on your income tax return - schedule D.  ProFunds won't allow you to exchange less than $1,000, so use that as a benchmark unless you are trading a large account, and click on the "One-to-Many" option on the ProFunds trade screen.  Because of the limit you can't move $700 from Fund A to Fund B, but you can move $1,000 out of Fund A, with $700 going into Fund B and $300 going to Fund C.  I don't believe that Rydex imposes the same restriction.

Keep in mind also, that your performance won't exactly match ours because your allocation to each fund in the portfolio won't exactly match ours.  That's because when you started, our account had already been trading for some period of time.  For example:  If a model holds 3 funds, we start with equal amounts in each fund....$5,000/$5,000/$5,000 or 33 1/3%, 33 1/3%, 33 1/3%.  By the time you started, we had been trading for a while, and our allocations will have moved somewhat, say 32%, 33%, 35%.  Even if we rebalance, it isn't possible to get the allocations exactly equal unless all of the fund positions were moved to cash for at least one day.  Your performance may be slightly better or worse than ours in any given month.