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Tutorial: Rebalance Investment Portfolios (1:14)

Rebalance portfolios to reset and redistribute current investment capital to original portfolio investment sector and investment weightings for individual, selected, or global investment portfolios in an instant.

Rebalancing investment portfolios is an important investment discipline because it allows the investor to capitalize on normal short-term investment price fluctuations with the goal of acquiring and accumulating all investments in the a portfolio at the best short-term price.

Rebalancing investment portfolios recognizes that individual investments do not go up or go down in value continuously and most often not in concert in the short term. Therefore, the discipline will generate sales of short-term profitable investments currently outperforming and averaging down on investments currently underperforming in an effort to capitalize on normal short-term investment price fluctuations resulting in obtaining the best average cost for all investments in the short term to best take advantage of anticipated general investment appreciation for all investments in the investment portfolio over the long term.

Rebalancing investment portfolios does not eliminate the need for investment or sector price alerts that signal underperformance beyond the prices and values anticipated or allowed when the investments were initially acquired. If price and/or sector alerts are hit, reweighting or liquidation is required with a reallocation of capital, as initially set, to the remaining and or replacement investments, if any.

There will be occasions when an investment is doing extraordinarily well in the short term and, for that reason, the investor may not want to sell as much of the investment that would occur when the portfolio is rebalanced.

In these situations, as explained below, the investment may be given a new, higher weighting before rebalancing the portfolio resulting in most of or all of the position being held.

One should keep in mind that the initial investment diversification was done to match a particular investment profile and that overweighting before rebalancing will result in the updating of a portfolio that is inconsistent with the initial investment profile because more capital is being concentrated in one investment resulting in a corresponding and significant increase in investment risk.

Portfolios may be Rebalanced for all Allocation Table Matrixes and linked Advisor Databases (Model Portfolios) all at once, for a selected Allocation Table Matrix and linked Advisor Database (Model Portfolio), for a specific Investment Strategy (Matrix Intercept) in a selected Allocation Table Matrix and linked Advisor Database (Model Portfolio), or for a selected portfolio.

If you do not want to reset current Investment Sector or investment weightings to original weightings for outperforming Investment Sectors and/or investments, enter the Associated Advisor Database and linked Allocation Table Matrix, overweight the outperforming Investment Sectors and investments, and then Rebalance.

After Rebalancing a portfolio(s) the Block Trade Worksheet shows the investments to be buy and sell. When more than one investment portfolio is selected for Rebalancing at the same time all buys and sells will be summarized on the Block Trade Report.

The Buy/Sell/Hold report, not shown in the first example, which is generated at the same time as the Block Trade Worksheet shows the buys and sell by account name and number.

The minor difference between the total Buy and Sell dollars, as shown in the illustration below, can occur if the investments to be Rebalanced have a unit price which is less than the remaining balance of capital available in the rebalance for an Investment Sector and the underlying investment; such as bonds; $1,000.00 price and only, for example, of the total capital to be rebalanced to bonds, $500.00 remains because their is not enough money left to buy the last $1,000.00 bond.

If trades are to be exported for execution, their is an option @ Export Trades to select share or dollar trade minimums; i.e., less than X shares or less than Y dollars. 

Rebalance/Reallocate Buy/Sell/Hold Reports

Simplified, Single Portfolio Rebalance, Single Sell Illustration

In the simplified illustration below, a portion of Janus Growth & Income Fund is sold and the proceeds are to be redistributed to the Buys to reset the portfolio to initial Investment Sector and underlying investment weightings. Clearly, a typical rebalancing situation would generate more Sells.

A modifiable Trade Export may be generated to export trades and import executed trade costs to update rebalanced portfolios.

Investment costs are stored and average costs are calculated and stored for positions that are increased during the rebalancing process.

The portfolio Rebalance/Reallocate Summary Reports show individual (used in this illustration), selected, or global buy/sell/hold investments in summary form and itemized by accounts under each symbol.

For a global Rebalance/Reallocate, combined summary reports are created.