Rebalancing

garmeg

Thrugelmir said:

Lloyds is a prime example of why investing in individual shares is a lottery. 

I do wonder what became of jimsusan from Motley Fool who had loads of Lloyds shares. Must have lost thousands of pounds on them.

Thrugelmir

garmeg said:

Thrugelmir said:

Lloyds is a prime example of why investing in individual shares is a lottery. 

I do wonder what became of jimsusan from Motley Fool who had loads of Lloyds shares. Must have lost thousands of pounds on them.

Worse if you had held Northern Rock or Bradford and Bingley.  Let alone subscribed to the RBS rights issue, a matter of months before it collapsed. 

Mothman

dunstonh said:

Rebalancing can mean different things depending on how you run your portfolio.
If you use static weightings and will always be returning to that arbitrary split, then rebalancing shouldn't be too frequent.  You could get away with every 4-5 years probably.
If you use fluid weightings then you should really rebalance annually.  Otherwise, you risk being overweight in an area that you dont want to be overweight in.  

Above is a chart that shows VLS60 in green (28.38% up in that period).  A portfolio of the same risk level taken out using Jan 2017 weightings and left to its own devices without rebalancing in red (30.74% up).    And the Blue is the same portfolio rebalanced using fluid weightings (41.07% up).

Not sure "fluid rebalancing" is for me, it sounds a bit too much like trying to time the market. From the chart it looks like the drawdown in Feb was much greater for the "fluid" portfolio but it appears to have benefited from the strong recovery, so can't help wondering what the comparison would have looked like had we suffered a prolonged equity downturn . Out of interest what percentage of higher risk assets (i.e. equities, HY bonds etc) made up the "fluid" portfolio at the start of the Covid crash?