Rebalancing a portfolio can help investors manage risk tolerance over time.

In this week’s Market Perspective, we discuss why, when, and how rebalancing can play a part in managing an investment policy. While some might rebalance every quarter or year, at Vector, we generally use a percentage-changed-from-policy approach to trigger a rebalance discussion. When we zoom out to the long term, 16+ year portion of the portfolio, we find more room to let investments run. Drift from afar can be allowed to linger for longer. Whereas, when thinking about income needs over the next few years, minimal drift is often the target.

Another couple of takeaways: Rebalancing can be used in down markets to set the table for future growth opportunities or preservation aims. And taxes. Selling investments may, depending on the account type, may create a taxable event.

And remember, if at first, you don’t succeed, try again the way your mother told you to the first time.

Happy Mother’s Day. We hope you have a meaningful springtime week ahead.

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