Continue to site >
Trending ETFs

How Often Should You Rebalance Your Portfolio?

Asset allocation is a core tenet of successful value investing. As the value of your portfolio changes over time, rebalancing becomes necessary to ensure your desired risk-reward profile is maintained.

Time-Only Approach

The time-only strategy requires that you rebalance your portfolio in pre-specified time intervals, regardless of how much or how little your asset allocation has drifted from its original target. Research carried out by Vanguard suggests there is no specific rebalancing frequency that consistently outperforms other strategies. Below is a snapshot of risk-adjusted returns based on monthly, quarterly, and annual time-only rebalancing.
Time-only appoach to rebalance

Threshold-Only Approach

Threshold-only approach to rebalance

Time-and-Threshold Approach

Time-and-threshold approach to rebalance

The Bottom Line