5 Steps to Portfolio Rebalancing

Published On: 04-Jul-2017

One should not keep all its eggs in the same basket. Such a piece of advice rightfully focuses on the importance of different asset classes within the investment portfolio. While one may have invested in various asset classes in an optimal proportion, the ratio can subsequently change due to the relative outperformance/ underperformance of different asset classes. It becomes vital for the investors to periodically rebalance the investment portfolio to keep it aligned with the investor risk appetite.

Here is a step-by-step guide to portfolio rebalancing:

 

01

Determine your target asset allocation

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02

Find the current asset allocation

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03

Formulate a rebalancing plan

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04

Consider the tax angle and exit loads

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05

Repeat the process periodically

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