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Types of Portfolio Rebalancing

When it comes to value investing, asset allocation and portfolio rebalancing go hand in hand.

Investors rely on a portfolio rebalancing strategy to minimize risk and ensure that their target asset allocations are met. After all, if you’ve spent a considerable amount of time weighing your investment goals, risk tolerance, and timeframe, you want to ensure that these variables remain consistent throughout the market cycle. That’s where rebalancing comes into play.

As asset classes produce different returns over time, rebalancing helps investors recapture their portfolio’s original risk-return profile. Therefore, rebalancing is mostly about minimizing risk relative to asset allocation rather than maximizing overall gains.

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Types of Portfolio Rebalancing

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