Rebalancing is the process of keeping the risk-return distribution of a portfolio in check with the planned proportions over time. It is a common technique used to maintain the asset allocation of your goal or overall portfolio.
Let's assume that you were recommended a portfolio of 50% equity and 50% debt in which you had invested a lumpsum plus a monthly SIP. Over the next six months, the equity markets perform very well, and as a result, even though you are investing in the 50-50 ratio, your portfolio's value based on NAVs today makes it 60% equity and 40% debt. Conversely, in a bear market, the current value of your portfolio could become 45% equity and 55% debt. In either situation, rebalancing helps to bring the portfolio back to its intended asset class distribution.
What is asset allocation?
Asset allocation is a portfolio construction strategy that involves the use of multiple asset classes to create a portfolio with risk and return characteristics suitable as per the individual’s risk profile. While equity and debt are the most ...
How do you rebalance your portfolio?
Rebalancing can be triggered based on different types of events, the two most popular being: Time-based trigger: Be reviewing your investments once a year, or any other pre-defined time period, you can re-calculate your asset allocations and ...
How does goal rebalancing work?
Rebalancing a portfolio can be done in two ways. One is to sell some funds and use the money to buy other funds. Another way is to increase SIP amount in a fund and decrease it in another to allow for the rebalanced allocation. Rebalancing by the ...
What is a Smart Flexi SIP?
Glide Invest's Smart Flexi SIP is a feature specially built to allow and enable you to take complete control of your goals. It gives ultimate flexibility to change the SIP amount, Pause, Stop, and Restart your SIP investments at any time, and ...
Why are my recommended SIP values the same?
Every goal at Glide Invest will typically have 3 portfolios associated with it, matching the risk profiles on our system and the duration/tenure of the goals. Sometimes, the SIP values for the different portfolio recommendations will come out to be ...