Rebalancing is the smarter practice in the management of a portfolio when done efficiently. It works to keep your selected investments on track and manage risks by re aligning the investments in your portfolio.

Let’s take the example that when you started your investment with us you selected a portfolio investing 60% in stocks and 40% in bonds. If the stock markets have a strong upward quarter your portfolio allocation might be closer to 70% in stocks and 30% in bonds. This difference from your target allocation is called drift and its simply the deviation from the agreed plan’s allocation. If your portfolios drifts then it means you are taking more or less risk from the agreed allocation. And because we want to always be in line with what we agreed from the very beginning we would sell the overperforming securities to book a profit and buy more from the underperforming securities to balance your portfolio back to the agreed levels.

We will rebalance your portfolio only in 3 cases:

1. Deposits/Withdrawals. Whenever we receive a deposit from you we will buy the underperforming asset class to bring back the portfolio to the initial target allocation. On the other hand if you are requesting money out, we will simply close out some overperforming positions in order to return to the initial target allocation.

2. Portfolio Deviation. A deviation (drift) of 10% or more as explained above will trigger a rebalancing in your portfolio. Our experienced portfolio managers will handle the rebalancing.

3. Quarterly rebalancing. If during a quarter we don’t have a deposit or withdrawal but we do have a level of drift we might still need to rebalance to protect against unexpected market events in some asset classes.

This document does not constitute and shall not be construed as a prospectus, advertisement, public offering, or placement of, nor a recommendation to buy, sell, hold or solicit, any investment, security, other financial instrument or other product or service. This document is for general information only and is not intended as investment advice or any other specific recommendation as to any particular course of action or inaction.