Dhirendra Kumar talks about setting a rule for rebalancing regularly.
24-Jun-2020
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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.
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