Articles on investing and capital management, with a quantitative focus.
Rebalancing My Portfolio
To maintain my portfolio allocation targets, I make sure that I invest new money into whichever asset(s) are the most underweight. These periodic purchases throughout the year "nudge" my portfolio towards the target weights.
This year, those incremental purchases were not enough to keep my portfolio at the target weights. To rebalance in a tax efficient manner, I placed trades inside my tax-sheltered accounts while making only minimal changes to positions in taxable accounts.
These rebalancing trades were:
- sell gold (
- buy bonds (
Over the past year, gold outperformed both stocks and bonds, and I ended up above my target weight in gold. Bonds, on the other hand, fell quite a bit and ended up below my target weight.
My stocks were already close to their target weight, and did not require any major adjustments.
Rebalancing does not have to be perfect. The weights of my assets are now within about 0.5% of their targets, which I think is close enough. I will continue "nudging" the portfolio towards target weights every time I buy or sell assets.
— Jem Berkes