What is portfolio rebalancing?

December 2, 2022

Portfolio rebalancing is a strategy used in investing to adjust the allocation of assets in a portfolio to maintain the desired level of risk and return. This can involve buying and selling assets in the portfolio in order to bring the allocation back in line with the investor’s target asset allocation.

Portfolio rebalancing is important because it can help investors to manage their risk and to ensure that their portfolio remains consistent with their investment objectives. By regularly rebalancing their portfolio, investors can avoid taking on excessive risk and can ensure that their portfolio remains well-diversified.

There are several different ways that investors can approach portfolio rebalancing. One approach is to rebalance the portfolio on a regular schedule, such as once per year or once per quarter. This can help investors to ensure that their portfolio remains well-balanced over time.

Another approach is to rebalance the portfolio based on changes in the market or in the investor’s circumstances. For example, if an asset in the portfolio has experienced significant gains or losses, the investor may choose to rebalance the portfolio to bring the allocation back in line with their target allocation.

Overall, portfolio rebalancing is a strategy used in investing to adjust the allocation of assets in a portfolio to maintain the desired level of risk and return. This can help investors to manage their risk and to ensure that their portfolio remains consistent with their investment objectives.

“There is nothing reliable to be learned about making money. If there were, study would be intense, and everyone with a positive IQ would be rich.” – John Kenneth Galbraith

This website is owned and operated by Investor Unity Pty Ltd (ABN: 90 160 624 331). Any advice included in this website or correspondence is general advice only and is based solely on consideration of the investment or trading merits of the financial products alone, without taking into account the investment objectives, financial situation or particular needs (i.e. financial circumstances) of any particular person. In addition to its internal services, Investor Unity is compensated by brokers and other third parties by way of referral/affiliate and/or general partnership arrangements, via its websites and other communications. Investor Unity is genuinely interested in your long-term trading & investment success. We advise you to take all necessary steps to ensure you have a good understanding of the products & services you’re considering investing in – particularly if they involve leverage. While Investor Unity takes every care to ensure that we only deal with the highest quality services, from throughout the industry, past performance is not a guarantee of future performance. Before making an investment or trading decision based on the general advice, the recipient should carefully consider the appropriateness of the advice in light their financial circumstances and should carefully review the PDS of the relevant financial product as provided by your investment broker. Past results are not a guarantee of future performance. Please contact us, to discuss any questions or concerns you may have- we are here to help.