Porfolio Rebalancing / Asset Allocation..

POSTED BY Pratibha ON December 2, 2012 11:55 am COMMENTS (4)


We have heard a lot about Porfilio Rebalancing which takes the portfolio’s to original Asset Allocation. I somehow feels we procastinate, Dont take it seriously. Its may because we dont have right tool to do it.

Do we have anyone who is actively doing Rebalancing every interval ( Say 6 to 12 months ) and if so how you are doing.  Share your best practice.

I use ICICI Direct for SIP / MF investments


4 replies on this article “Porfolio Rebalancing / Asset Allocation..”

  1. Found this to be a nice resource:


  2. Thanks, Sounds like a good plan. I read your earlier question on retirement and it looks like you are well on your way. Inspiring!
    I overlook things even when using my own calculators! So I recalculate each year,

  3. Pratibha says:

    Thank you, Pattu. On the other note, your comprehensive retirement planner and staggered child goals is kind of a realistic approach towards planning these 3 goals. Even though i planned few years back for these 3 goals, i overlooked things such as equity free zone, tax on the pension. I have an action item to align my plan/investment based on the results from your spreadsheet. Your passion for Finance plus Your analytic skills is doing wonders in many people like me.

    You are right on rebalancing. Excel is one option.
    In US, there do portfolio rebalancing by below ways
    a) 401k provider has an automatic portfolio rebalancing every 6/9/12 months
    b) Users will control the future investment and invest to align with original allocations..

    I am thinking of doing something.

    For retirement 10+ Years.
    Original Allocation:
    60% Equity MF + 10% Debt MF Funds + 10% Gold ETF + 20% ( PPF + PF )

    PF+PPF : Average constant return 8%
    For Equity MF + Debt MF + Golf ETF —-> Have 6-9 months SIP.
    After 9 Months, adjust each SIP value to align it back to, original allocation

  4. This is an interesting topic. The only tool needed is emotional discipline.

    The discipline to sell the a portion of the asset class which has done well (and has exceed your original asset allocation) and buy more of other asset classes to retain your original asset allocation.

    To do this a simple sheet of paper or an excel file should do.

    at the end of 6 months or 1 year determine % equity and % debt, % gold in your portfolio and check if it is close to your original strategy and act accordingly.

    personally I use an excel file to meticulously track month by month if I invest 60% in equity and 40% in debt.
    However I haven’t rebalanced my portfolio yet because I started in 100% debt for a few years before I started equity investments. So it would take a while for my corpus to reflect 60% equity and 40% debt. So it depends.

    If equity returns far exceed your expectations for a few years it may be wise to move a portion to debt irrespective of asset allocation %

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