Portfolio Construction

Rebalancing

Definition

What is Rebalancing?

Restoring a portfolio toward its target weights by buying or selling assets.

Example in practice

After equities rise to 70% of a 60% target, the investor sells some shares and buys bonds.

Keep learning

The complete collection of investments owned by an investor or managed under one mandate.

The process of selecting and combining investments to meet return, risk, liquidity, and time-horizon objectives.

A long-term target mix of asset classes based on an investor's objectives and constraints.

A statistic ranging from minus one to plus one that describes how two return series move together.

Think you know your investing terms?

Put your knowledge to the test with a quick quiz.