Rebalancing portfolio info?

hyposmurf

Where can I find online info on rebalancing a portfolio?

Aegis

What information were you looking for?

Essentially rebalancing is just shifting funds around a bit so that the overall portfolio once again matches your risk profile and the consequent asset allocation. If you're looking for what you should rebalance to, then search for asset allocation.

If you wanted information about when to rebalance, that's more or less up to you. Many seem to agree that once a years is generally sufficient. Any longer between balances and you have quite a high chance of working with a portfolio that lies outside your desired risk range, and any shorter and you won't take as much advantage of the high-potential assets in your portfolio.

purch

Another 'rule of thumb' often stated is that if an Investment is showing a 25% or more 'profit' :j .... then it's time to consider a re-balance

Aegis

That's not a bad idea actually... though none of my funds have managed to get to the lofty heights of 25% in the time I've held them for so far, the JPM Natural Resources one is probably going to get there early next year if it continues doing as well as it has recently (I know, past performance and such, but I can hope!). I'd be happy to lock in some gains from that fund when it hit that level, and it might be worth rebalancing the whole portfolio at the same time.

I'll let you know if and when it happens

dunstonh

If you start a portfolio using say 8 sectors with a certain percentage allocated to each sector, then over time, the allocation will go out of sync with your original intentions and risk profile. So, you just bring it back to your original allocations. Professional allocations tend to get updated quarterly to reflect market conditions (although quarterly changes are not much. Maybe 1% here or there. Once a year is satisfactory for most people unless you are talking large amounts of money).

ramagel

I wish I could remember where this used to be possible - maybe Moneyextra before it got taken over.

There was a website where you entered stuff like: your attitude to risk, commented on your experience, answered questions like "if a fund went down by 20% what would you do a) sell b) nothing c) wait and review d) buy more", nominated the sum involved and how much of your total assets it represented, some other pertinent questions (all of which my memory fails me on) and it then presented not only a recommendation by sector (e.g 35% UK equities, 15% property, 50% bonds or whatever) but also suggested specific investments.

It was always a useful cross-check for me to see a) where my portfolio stood on the risk/reward spectrum and what funds it might be worth doing some reading on.

I've tried to find it over the last few days, but it seems to have gone away: can anyone remember it?

Couple of other suggestions: Allenbridge produce a publication every so often which has some useful information in it and - I might be wrong - some recommendations for investments for different attitudes to risk. Not something to follow slavishly, but something to give you an idea of what others consider 'balanced' in different circumstances (http://www.allenbridge.co.uk/pdfs/isadirect30.pdf) - that's a direct link to the .pdf - don't click on it if you're still on dial up!

Alternatively http://www.torquilclark.com/ did it for me, but you've got to have £100k+. No charge, they live off the trail commission and any up-front commission where relevant. All very open and transparent about it.

ramagel

dunstonh wrote: »

Once a year is satisfactory for most people unless you are talking large amounts of money).

Or major changes in the financial environment? Would you say that is time for a rebalancing exercise (sometime 'soonish' is what I'm thinking)?

Some profit taking and looking for new opportunites? Or is that best not called 'rebalancing' but something else maybe ....?

munk

Bestinvest has a portfolio tool that allows you to balance your portfolio. When it works (it is very buggy) there's nothing else like it out there for free.

I think Morningstar probably provide a similar tool to this if you pay the £1200(?) per year for their desktop adviser service (aimed at IFAs of course). Not worth it for your average joe investor though.

Debt_Free_Chick

ramagel wrote: »

There was a website where you entered stuff like: your attitude to risk, commented on your experience, answered questions like "if a fund went down by 20% what would you do a) sell b) nothing c) wait and review d) buy more", nominated the sum involved and how much of your total assets it represented, some other pertinent questions (all of which my memory fails me on) and it then presented not only a recommendation by sector (e.g 35% UK equities, 15% property, 50% bonds or whatever) but also suggested specific investments.

Fidelity Portfolio Manager does this. You need to register

ramagel

Debt_Free_Chick wrote: »

Fidelity Portfolio Manager does this. You need to register

You're kidding! D'oh! No wonder it sounded familiar .... that's where my whole portfolio is! I guess I - ahem - better check what they recommend!

dunstonh

Or major changes in the financial environment? Would you say that is time for a rebalancing exercise (sometime 'soonish' is what I'm thinking)?

Not really. You cannot time this things accuratly and you can do more damage trying to time things than sticking with a rigid date.

e.g 35% UK equities, 15% property, 50% bonds or whatever

Problem with that is that is very basic and ignores many sectors. Where are the European equities, Far east, japan, US, specialist and emerging markets?

I think Morningstar probably provide a similar tool to this if you pay the £1200(?) per year for their desktop adviser service (aimed at IFAs of course). Not worth it for your average joe investor though.

It is £1200 a year per adviser. I tested it but preferred Financial Express' offering though which is a bit more expensive (£5000 for 3 people). However, its a cost that is worth it.