Is there a rule of thumb for portfolio managers

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Reference no: EM132078538

Question: Say you are given 20 stocks. You need to create an optimal portfolio. The weights need to sum up to 100%. What constraints would be reasonable to put on the weights? As in exact percentages as limits, e.g. no stock can exceed 40% and no stock can hold less than 5% weight. (No shorting no negative weights).

Is there a rule of thumb for portfolio managers on what percentages/limits/constraints are acceptable to put on the weights 40% and 5% are just made up for the sake of the question.

Reference no: EM132078538

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