Kuantile
Portfolio Rebalancing: When, How and Why?
Say you set your portfolio at new year: 50% stocks, 30% gold, 20% bonds. Six months later stocks have run and the mix has drifted to 65-22-13. You no longer hold the portfolio you chose, but the one the market left you — with risk visibly above target. Rebalancing is the discipline of consciously pulling weights back to target.
Why it works
The mechanical benefit is risk control: the swollen asset is trimmed and volatility returns to target. The behavioural benefit is greater still: rebalancing forces you to sell what has grown expensive and buy what has grown cheap — systematically, and precisely opposite to what emotions dictate. "Sell high, buy low" is hard by willpower and easy by rule.
Two common strategies
- Calendar-based: rebalance on fixed dates, one to four times a year. Simple, disciplined, predictable costs. Studies find that increasing frequency (monthly to weekly) doesn't meaningfully improve returns but does raise costs.
- Threshold-based: act when a weight drifts beyond a set band (e.g. 5 absolute points, or 25% relative). Fewer trades in calm markets, timely braking in strong trends. It needs closer monitoring — which is where automatic reports come in.
Türkiye-specific considerations
- Taxes and costs: frequent rebalancing incurs spreads and, depending on the asset, withholding taxes. For investors still adding savings, the most elegant method is directing new money into the underweight asset — rebalancing without selling.
- The currency effect: TRY-based weights drift with the exchange rate too. A 15% lira slide inflates your dollar assets' weight even if they never move — generating a rebalancing signal. That is not a bug; it is the nature of TRY-based risk management.
- The over-tuning trap: 1-2 point drifts are noise; fiddling with the portfolio weekly costs money and, worse, attention.
Tracking it with Kuantile
The Allocation chart shows your current weights at every analysis; weekly and monthly report emails keep reminding you where weights and risk (VaR) are drifting. Note your target mix somewhere, compare it with one report a month, and make the rebalancing decision in five minutes — looking at data.
See your current allocation →