Re-balance Cycle Reminder All MyPlanIQ’s newsletters are archived here.

For regular SAA and TAA portfolios, the next re-balance will be on Monday, March 28, 2016. You can also find the re-balance calendar for 2015 on ‘Dashboard‘ page once you log in.

As a reminder to expert users: advanced portfolios are still re-balanced based on their original re-balance schedules and they are not the same as those used in Strategic and Tactical Asset Allocation (SAA and TAA) portfolios of a plan.

Please note that we now list the next re-balance date on every portfolio page.

Smart Rebalance When Market Trend Changes

Strategic Asset Allocation (SAA) based portfolios performs periodical portfolio rebalance. There are three major advantages to rebalance periodically: 

  • Rebalance portfolio allocations to a preset target allocation that is more aligned to one’s risk tolerance. For example, after stocks have risen a lot, stock allocation in a portfolio can become too overweight to conform with the investor’s risk tolerance. Similarly, after stocks have lost a great deal in a market downturn, their allocation can become underweight relative to other assets (usually fixed income bonds). 
  • Rebalancing is a buy low and sell high strategy as it sells rising assets and buys beaten down assets. 
  • Rebalancing is also a way to periodically check the underlying holdings (for example mutual funds) and weed out bad performers. This is often needed for a 401k account as it has a pool of candidate funds from the plan to select. This is more important for a portfolio using actively managed funds than passive index funds. 
Other common reasons to rebalance a portfolio include tax efficient investing: for example, at the end of year, a smart rebalance can try to harvest tax loss by selling funds that have loss and substitute them with similar funds. By doing so, one can incur loss to offset other capital gains. 

Rebalance with a fixed schedule

The most commonly used rebalance strategy is to regularly rebalance based on a fixed schedule. For example, in MyPlanIQ, our SAA portfolios have a quarterly rebalance frequency by default. Users can also specify other frequencies such as monthly and annually. 

An often asked question is what is the best rebalance frequency. The answer is surprisingly confusing among investment professionals. Some would suggest quarterly rebalance, others suggest annually. However, empirical evidence is all over a map and inconclusive. 

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