How to Rebalance Portfolio
Use a rule-based process to restore target allocation while controlling turnover and concentration risk.
Rebalancing Framework
- Define target weights and drift thresholds by asset sleeve.
- Prioritize risk contribution balance over raw dollar parity.
- Use scheduled reviews plus threshold triggers for large deviations.
Execution Checklist
- Reduce oversized positions driving portfolio volatility.
- Reallocate to underweight sleeves with lower correlation.
- Re-test expected volatility and Sharpe before implementation.