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What's Portfolio rebalancing?
Active management metrics explained
Rebalancing is the process of realigning the weightings of a portfolio of assets. Rebalancing involves periodically buying or selling assets in a portfolio to maintain an original or desired level of asset allocation or risk.

KEY TAKEAWAYS

  • Rebalancing is the act of adjusting portfolio asset weights to restore target allocations or risk levels over time.
  • For example, say, the original target asset allocation was 50% Bitcoin and 50% Ethereum. If Bitcoin performed well during the period, it could have increased the Bitcoin weighting of the portfolio to 70%. We may then decide to sell some Bitcoin and buy Ethereum to get the portfolio back to its original target allocation of 50/50.
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