Simply put, rebalancing is buying or selling asset classes that fall below or rise above a predefined long-term asset class target. Rebalancing fosters the discipline of “buy low and sell high.” In theory, buying low and selling high seems simple, but in practice, emotions tend to dictate the actions of finance and investment committees. Opportunities to buy (when an asset class falls below its target) are often created when bad news or negative market predictions depress prices. Conversely, opportunities to sell (when an asset class rises above its target) may be created by good news and positive predictions of the future for that asset class. In our experience, without adequate education, many finance and investment committees will increase investments in their best-performing asset classes and decrease their investments in their worst-performing asset classes typically at just the wrong time. If this pattern is repeated, the portfolio value and subsequent spending availability will likely be less than desired. A rebalancing policy should have several components, including:
- Specific targets for each asset class.
- A high-end and low-end tolerance band.
- A predetermined review frequency.
- A plan of action if an asset class is outside its band.
Our research has shown that with a disciplined rebalancing policy, you may be able to improve your performance and lower your volatility.
Click below for more information about Mason’s approach to asset allocation.
Click below to request more information about Mason’s approach to portfolio rebalancing.
Washington, DC Area Office:
Address: 11921 Freedom Drive, Suite 1000, Reston, VA, 20190
(703) 716-6000 (Phone)
(703) 716-6020 (Fax)
San Francisco Bay Area Communications:
(925) 365-1603 (Phone)
(925) 365-1756 (Fax)
Sign up for updates
Investment Management and Financial Planning Services are provided by Mason Investment Advisory Services, Inc.
Mason Investment Advisory Services, Inc. is a SEC registered investment advisor and has an affiliate, Mason Securities, Inc., a FINRA Member Broker/Dealer (www.finra.org).
All information contained on this website is © Copyright, Mason Investment Advisory Services, Inc.
All client portals are provided on an “as is” and “as available” basis. Use of these websites is at your own risk. We and our suppliers disclaim all warranties. Neither we nor our suppliers shall be liable for any damages of any kind with the use of this website. Using the portal requires the use of a password and a user name. Please take appropriate security measures to maintain the confidentiality of your password and username.