Dynamic Asset Allocation

Assets change all the time. Not monthly or quarterly or yearly. But rather, a given index is supposed to reflect a market subset, and as the elements that comprise that index change all the time, continuously, so too then has to change the allocation of those assets, so that they reflect the index.

Example.

You have created an index fund that will be 10% telecom companies. Always. As such, when T and VZN and CMCSA go up and down, you'll need to dynamically adjust the asset allocations to that area to maintain the 10% ownership reflection you promised investors.