Rebalancing Your Portfolio

As markets go up and down over time, your asset allocation will deviate from the strategic plan we initially set in place. Rebalancing is simply the process of bringing your portfolio back in line with your strategic asset allocation.

Rebalancing is an important tool for managing risk, but it requires trading, and there are costs to trading. Our approach to rebalancing strikes a balance between managing the risk of a large deviation from your strategic asset allocation target and minimizing trading costs.

  • We set tolerance bands for each asset class.

  • We use a robust trading system to monitor compliance with tolerance bands on a daily basis.

  • To minimize costs and tax events, we will remedy allocations that move outside the tolerance band without fully resetting the total portfolio.

  • When possible, we use portfolio cash flows to bring the portfolio back into alignment with your strategic asset allocation.

Beyond this strategic approach to rebalancing over time, we may also tactically rebalance your portfolio in periods of meaningful market dislocations. For example, when stock markets dropped meaningfully at the onset of the COVID-19 pandemic, we opportunistically increased stock allocations for our clients to take advantage of falling prices that we thought to be exaggerated.

Frequently Asked Questions

What Our Clients Say

This testimonial has been given by a current client of Heritage Financial Services. No compensation was provided for this testimonial.

Awards & Recognition

Selection criteria used to award each of these recognitions is available by clicking on the award logo.