"Portfolio Construction and Revision" is a sub-heading of "Portfolio Management and Wealth Planning" (Part X of CFA Institute Candidate Body of Knowledge, or CBOK).  As portfolio management and wealth planning are significant disciplines that CFA® candidates and charterholders find themselves engaged in on a day-to-day basis, it is useful to explore functionality within the terminal setting that can be applied to these tasks.

One of the remarkable trends of the last 10 years has been the growing popularity of exchange traded funds (ETFs) as advisers and the investing public have grown frustrated by their failed efforts to outperform the major market indexes. As returns continue to fall short of expectations and the prospects of subpar annual returns looms on the horizon, fees for actively managed portfolios are receiving greater attention than they would in a higher-return environment. 

When evaluating investments, analysts are taught to focus qualitatively on the sources of competitive advantage and quantitatively on forecasts for growth, profitability, and returns on capital. Little emphasis is placed on the shareholder base. But not all businesses have the same shareholders, and the differences matter.

For my entire career as a trader, portfolio manager, and investor, I've relied on a combination of systematic (or rules-based) methodology, fundamental analysis (understanding the trends of significant economic indicators), and technical analysis (the historical review of price data and charts) to understand market trends and actions. The building blocks of successful active management (alpha generation) must incorporate elements of each of these analysis tools.

Buy and hold (B&H), constant mix, and constant proportion portfolio insurance (CPPI) are commonly used dynamic strategies for rebalancing portfolios.