Glossary · concept
Rebalancing
- Definition
- Rebalancing is the periodic adjustment of a portfolio back to its target asset allocation after market moves have caused drift. Forced discipline that mechanically sells winners and buys losers within the agreed risk budget.
Discretionary mandates handle rebalancing automatically; advisory mandates rebalance on client approval. Common rebalancing cadence is quarterly, semi-annual, or threshold-triggered (e.g. allocate back to target if any asset class drifts 5% from target). Tax-aware rebalancing factors in capital-gains harvesting decisions.
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