Portfolio a alokace
Threshold vs. Calendar Rebalancing: Which Is Better?
Key takeaways
- Calendar rebalancing happens at fixed intervals — typically once a year — regardless of market movements.
- Threshold rebalancing is triggered only when the allocation drifts beyond a pre-set limit.
- Both methods work: the key is choosing one and sticking to it consistently.
- Threshold rebalancing is more efficient in trending markets; calendar rebalancing in sideways-moving markets.
- The cheapest solution is a combination: review once a year and act only if the threshold has been breached.
Threshold and calendar rebalancing are two strategies for restoring a portfolio's target allocation — they differ only in what triggers the action: a deviation from the target, or the passage of time.
Calendar Rebalancing
The simplest variant: once a year (or quarterly), you review the portfolio and restore the allocation to target regardless of how much it has drifted. Advantages are clear rules and low behavioral stress — you don't need to monitor markets continuously. Disadvantage: if the market has only drifted slightly, you trade unnecessarily.
Threshold Rebalancing
You act only when the allocation drifts by a pre-set value — typically 5 percentage points. If you're targeting 70/30 and equities have risen to 76%, you rebalance. At 74%, you do nothing. Advantage: fewer unnecessary trades during quiet periods. Disadvantage: you need to monitor the portfolio on an ongoing basis.
What Research Says
Comparative studies of both methods reach a similar conclusion: the difference in outcomes is small. The costs of rebalancing and tax efficiency matter more than the choice of method. For a passive investor with two to three funds, transaction costs are negligible under both methods.
How to Proceed in Practice
Link rebalancing to regular investing: buy the underweighted component every month, and once a year carry out a formal review. If the allocation breaches the threshold, sell or buy the remainder. A well-managed rebalancing takes less than an hour per year and significantly reduces portfolio risk.
FAQ
What is threshold rebalancing?
Rebalancing triggered by a drift in allocation from the target — for example, when five percentage points are exceeded. You act only when it is truly necessary, minimizing unnecessary trades.
What is calendar rebalancing?
Rebalancing carried out at fixed time intervals — most often once a year. It is simpler to track and requires no ongoing monitoring of the portfolio.
Which rebalancing method is better?
Both are functional. Research shows negligible differences in outcomes. What matters more is choosing one strategy and consistently following it — rather than searching for the perfect one.