We compare the asset allocation of your portfolio against your target asset allocation on a daily basis and rebalance when required.

Anytime, you make an additional contribution to your portfolio, we use it as an opportunity to rebalance your portfolio (subject to minimum trade sizes).

We've set thresholds so if your asset allocation moves far enough from the target allocation we will rebalance for you, even if you haven't made contributions. The thresholds are different for each portfolio and asset class depending upon characteristics such as total portfolio risk and asset class volatility. 

Broadly speaking, the rebalancing thresholds are set so that the portfolios do not materially deviate from their expected long term risk/return profile and yet shouldn’t be so restrictive so as to generate excessive rebalancing. Too frequent rebalancing risks generating poorer tax outcomes and excessive transaction costs. Additionally, the thresholds are set wide enough so that they can take advantage of the expected momentum exhibited by asset returns over the short term but not too wide to deviate materially from the expected long term risk/return profile.

In the absence of contributions, we expect that the rebalancing transactions will occur once or twice over a 12 – 18 month period.

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