There are basically two methodologies on rebalancing. Either a predetermined time such as annually or when the allocation of one or more assets gets a set percentage off of its target. My question is about the latter. For example let’s say my target for an asset allocation was 10% and my rebalance point was when it was plus or minus 5% of the target. If the asset allocation grew to 12% would that be considered 2% out of balance thus not needing to be rebalanced or would that be considered 20% off of the target. The former seems more logical to me but I just want to be sure.
Here is my current allocation for each equity vs. target. Does it appear to need rebalancing? I am thinking maybe some Emerging Markets needs to be redeployed to Small Value.
Actual
Target
LARGE CAP VALUE
SMALL CAP VALUE
INTL STOCK
INT'L SMALL COMPANY
EMERGING MARKETS
I am not looking for opinions on my equity selections or target allocations. I just need a little guidance on the rebalancing methodology. Everything is in tax deferred accounts.
Thanks
Here is my current allocation for each equity vs. target. Does it appear to need rebalancing? I am thinking maybe some Emerging Markets needs to be redeployed to Small Value.
Actual
Target
LARGE CAP VALUE
40.6%
40.0%
14.0%
16.0%
11.7%
12.0%
18.6%
20.0%
14.1%
12.0%
I am not looking for opinions on my equity selections or target allocations. I just need a little guidance on the rebalancing methodology. Everything is in tax deferred accounts.
Thanks