A good article on portfolio rebalancing:
Three key strategies can help investors take advantage of portfolio rebalancing:
- Time-only. Triggers a rebalancing based on a set time schedule such as monthly, quarterly or annually.
- Threshold-only. Ignores time and triggers rebalancing only when a portfolio deviates from its target asset allocation by a predetermined minimum percentage, such as 1 per cent, 5 per cent, 10 per cent. It requires daily monitoring to determine timing.
- Time-and-Threshold. The portfolio is monitored on a set time schedule but is rebalanced only if the allocation deviates from the target by the predetermined minimum rebalancing threshold at that time.