Broker Check


What Is Rebalancing?


Updated Jun 22, 2019


Rebalancing is the process of realigning the weightings of a portfolio of assets. Rebalancing involves periodically buying or selling assets in a portfolio to maintain an original or desired level of asset allocation or risk.

Why is Rebalancing important?

By R. Jeff Green

March 1, 2020


Most portfolios have a combination of Fixed Assets such as US Treasuries and Bonds along with Equities. Many investors will allocate their portfolio by a percentage of each, as shown in the example below.

Our Process

This is an example of a Moderate or Balanced Portfolio. It has an equal percent of Fixed and Equities. The investor is neither conservative or growth in their investment approach.

Our History

An example where Equities have grown in value by 10%, putting the portfolio closer to growth mode, thus more risk.

Our Values

Since the desired 50/50 portfolio provides for moderate risk tolerance, 10% of the equities are sold to purchase 10% fixed to bring the portfolio back to 50/50. Note: In this case, the equities are sold at a premium, and the fixed is purchased at a discount. Sell High-Buy Low

An unbalanced portfolio can bring disaster. Rebalancing will maintain your risk tolerance and can bring additional premium to the portfolio. Rebalancing should be considered every quarter, but should not take place unless the drift exceeds 5 percent.

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