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Rebalance definition

Trading frequency can range from second-by-second for high-frequency strategies to annually for buy-and-hold value mandates.

Beginner

Rebalance is the process of changing the weights of assets like stocks or bonds in a portfolio by trading. Portfolios, indexes and benchmarks are all rebalanced. Some common benchmarks are rebalanced according to a set quarterly or annual schedule. Active portfolio managers may rebalance their portfolios as frequently as quarterly, monthly, weekly, daily or even hourly, depending on the desired portfolio turnover.

Synonyms: trade, re-weight, re-allocate


Other Original Content

Quiz

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It is more common for active managers to rebalance a portfolio when alpha models change rather than risk models. | True or False?

True

In a Sentence

Guy:  A survey showed a change in fund rebalance  frequency after the financial crisis.
Eve:  Yeah, I remember. That's when risk and compliance officers became office rock stars.

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Keywords:
rebalance
optimization
active management
rebalance frequency
trade
re-weight
portfolio holdings
stock
bond
fund
turnover