Rebalancing

Rebalancing is the act of trading a portfolio back to the weights it was intended to hold. Because winners grow their share and losers shrink theirs, a mix set up as seventy and thirty drifts away from those numbers on its own. Restoring it means selling part of what grew or directing new money towards what shrank, and the second route involves no selling at all.

Why it matters

The reason people give for doing it is that the drifted portfolio is no longer the one they chose, so its behaviour in a bad stretch is no longer the behaviour they signed up for. The reasons for hesitating are equally concrete: selling can realize gains that are taxable, every trade carries a cost, and a rule that triggers often is a rule that trades often. Common approaches are a fixed calendar, a threshold such as five percentage points of drift, or directing contributions instead of selling. Which of those fits, or whether any does, is a question about your own plan and not something a tracker can answer.

How BullBenchmark shows it

We show the weights rather than suggest changes to them: allocation by sector, by country and by currency, and the value of every position across all your brokers in one currency. Time travel makes the drift itself readable, since setting a date in the past rebuilds the same allocation as it stood then. Both the current allocation and the date control are available on the live demo.

Related terms

Portfolio weight · Market value · Sub-portfolio

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