The second part of our Investor's Alpha series focuses on the importance of having a plan in place to systematically rebalance a portfolio. Having a set of rules to guide the construction and maintenance of a portfolio can enhance returns. It is also important to note that rebalancing is not a return maximization strategy; rather, it is a risk realignment strategy.
Portfolio Rebalancing is an investor controlled input into the wealth equation:
Wealth = Factors You Control + Investment Returns
Peak Capital Research & Management believes that in a low return environment, investor controlled inputs will be an important factor in enhancing returns in a low return environment.