Portfolio Rebalancing today!

Portfolio rebalancing is the process of realigning the weights of the assets within a portfolio to maintain a desired allocation of risk, return, and exposure. As market fluctuations occur over time, the values of different assets can change significantly, leading to a drift from the original asset allocation. This drift can impact how well our portfolios align with our investment goals and risk tolerance.

Rebalancing is crucial in ensuring our portfolios remain consistent with our overall investment strategy. It helps us manage risk effectively and can enhance long-term returns.

We wanted our audience to get an overview of the portfolio rebalancing process, which is crucial for maintaining your desired investment strategy.

Assess Current Allocation: 

The first step is to review your portfolio’s current asset allocation. This includes examining the percentages allocated to each asset class, such as stocks, bonds, real estate, and cash.

Set Target Allocation: 

Next, we will define a target allocation that aligns with your investment goals, risk tolerance, and time horizon. For example, this could be a mix of 60% stocks and 40% bonds or another proportion that suits your needs.

Compare Current Allocation vs. Target: 

We will then compare your current portfolio allocation with the established target to identify any assets that are overweight (exceeding the target) or underweight (falling short).

Set Rebalancing Frequency: 

You can choose between time-based rebalancing at fixed intervals (quarterly, semi-annually, or annually) or threshold-based rebalancing when an asset class deviates by a specific percentage from its target allocation (e.g., exceeding or falling below by 5%).

Please feel free to reach out if you have any questions about this process or if there's anything specific you'd like us to discuss further.