Is it the right time for portfolio rebalancing?
- Ajeez
Absolutely, if you haven't done it so far. I feel the best time would have been on March 31st, as equity values were down by 20-30 per cent on that day. And in some combinations of mid and small caps, it went down further. You should have a rule of rebalancing. Decide the allocation, say 50:50 and rebalance every year. Have a time frame set for it.
Alternatively, you can have a rider that if your allocation changes say by 10 per cent, you will act. So, if you have decided a 50:50 allocation and it becomes 55:45, act. If it further changes and again becomes 55:45, act further. This will be a very methodical way of buying low and selling high with some discipline. The portfolio tracker on Value Research Online can help you check your asset allocation.
This article was originally published on June 24, 2020.
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