Rebalancing your portfolio

Here at Korving & Company we rebalance our client portfolios on a regular basis.  Rebalancing insures that the asset allocation that we set for our clients remains within our guidelines.  Why is that important?  Because over time, portfolios become either more aggressive or more conservative than an investor desires unless attention is paid to the asset allocation.

That is why we were glad to see an article in the Wall Street Journal that said this about the Vanguard Wellington Fund:

Rebalancing boosted the fund’s performance over the past 10 years.
As an actively managed balanced mutual fund, Wellington rebalances as a matter of course, maintaining about two-thirds of its portfolio in stocks (typically large-cap value stocks) and the other third in bonds (typically investment-grade corporate bonds).  And, indeed, this maneuvering yielded a performance bonus in recent years.

Since the way to make money is to buy low and sell high, it makes sense that rebalancing forces you to do exactly that: selling off some of your appreciated assets to buy those that have lagged.  Regularly scheduled rebalancing also provides a good time to review your investment selections to see if they need to be changed.  That way your portfolio never gets stale or retains old assets that don’t perform well any more.


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Korving & Company, Investment Management, Suffolk, VA

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