Jay Vivian: "Rebalance Frequency"

“There’s no real right answer…”

There’s no real right answer as to how often an individual investor should rebalance back to their target weights or their target mix. There’s research that says that every three months or every six months is probably right. Some people rebalance every quarter. Some people just look at it once a year. I lean towards three months, myself, for an individual investor.

In the last few years, maybe even longer than that now, new products have come into the market which have multiple asset classes in them and which rebalance themselves within the investment opportunity. So you have balanced funds.

We now have target date funds. We have target risk funds. And the Rebalance products are basically multi-asset class funds at a couple of different risk levels. Or age appropriate levels, if you will. And what those funds do is they automatically rebalance themselves.

So if stocks go up they might sell some of those stocks and buy some of the other classes. If stocks go down they might sell some of the other asset classes and buy stocks with them. This is really good for somebody who doesn’t want to have to check it every month or every three months because the products themselves are automatically doing that rebalancing and you don’t have to worry about it. You don’t get detailed reports on it. You don’t have to check your target. You don’t have to worry if you’re a little older than you were last time and maybe the risk level has changed. So that’s a really good thing about these products.

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