Rebalancing: An Active Approach

  • Rebalancing is a key but often underemphasized component of active portfolio management.
  • Routine rebalancing can enhance returns in normal market environments, but can also increase drawdowns during persistent market declines.
  • Incorporating simple momentum signals into rebalancing decisions can help investors avoid rebalancing at inopportune times and improve risk-adjusted outcomes.
  • Taxable investors will likely find it optimal to use bond income, equity dividends, and portfolio inflows/outflows to incrementally rebalance on an ongoing basis.

Investors and their advisors spend considerable effort developing target asset allocations and selecting investment managers but frequently overlook rebalancing as an important component of portfolio management. While the necessity of occasional portfolio rebalancing is obvious to keep portfolios in line with allocation targets, the specific characteristics of an optimal rebalancing strategy are not nearly as clear. In his latest white paper, “Rebalancing: An Active Approach,” CIO Michael Crook explores this topic in depth. Download the white paper to read more.

Read the white paper here.

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Disclosures & Important Information

Any views expressed above represent the opinions of Mill Creek Capital Advisers ("MCCA") and are not intended as a forecast or guarantee of future results. This information is for educational purposes only. It is not intended to provide, and should not be relied upon for, particular investment advice. This publication has been prepared by MCCA. The publication is provided for information purposes only. The information contained in this publication has been obtained from sources that

MCCA believes to be reliable, but MCCA does not represent or warrant that it is accurate or complete. The views in this publication are those of MCCA and are subject to change, and MCCA has no obligation to update its opinions or the information in this publication. While MCCA has obtained information believed to be reliable, MCCA, nor any of their respective officers, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

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