shares of Company XYZ to bring the percentage of this particular investment vehicle back to 50% (instead of the 52% you have after the hike). On the other hand, the value of international stocks sank by 5% and the robo-component of the rebalancing software estimated that you need
52
more shares of Company QWE to balance this category back to the original 20%. So what does all this mean? The rebalancing software calculates what to buy and what to sell
,
taking into account real-time market data with current prices for stocks you’re keen on and the cost of the transaction.
How often should you rebalance?
Above, we gave an example in which
periodic rebalancing = client-level
rebalancing when readjustment of the portfolio ratio is done on an annual basis. Another way to look at asset allocation and rebalancing practices and monitor the performance at portfolio level is to apply the threshold rebalancing technique
.