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What is portfolio rebalancing and why investors should care
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STRATxAI

June 2024 · 5 min read

What is portfolio rebalancing

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Intermediate

Whether you are focussed purely on quantitative strategies or have diversified in other asset classes, once you have set up your investment portfolio you will have some ongoing maintenance to keep it in line with the metric in your risk budget.

Rebalancing a portfolio requires the buying and selling of positions in your portfolio to get back to your original asset allocation. When one asset class significantly outperforms another, your portfolio drifts from its starting allocation.

Read on as we explain the process of rebalancing various asset classes or click here to learn specifically how to rebalance an STRATxAI portfolio.

1: Rebalancing a stock and bond portfolio

A classic investor holding stocks and bonds, may have decided to hold 50% of their portfolio in stocks and 50% in bonds at all times. They could plan to rebalance the portfolio on a monthly basis.

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