Investing is a dynamic market place; it is reactive and predictive at the same time, therefore the asset mix originally created by our team in accordance with your Plus+Portfolio inevitably changes as a result of differing returns among various securities and asset classes. As a result, the percentage that you’ve allocated to different asset classes will change.
What Is Rebalancing?
Rebalancing is the process of buying and selling portions of your portfolio in order to alter the weight of each asset class in reaction to market changes. In addition, if an investor’s investment strategy or tolerance for risk has changed, he or she can use rebalancing to readjust the weighting of each security or asset class in the portfolio to reflect these changes in attitude.
The Consequences Imbalance
A popular belief among many investors is that if an investment has performed well over the last year, it should perform well over the next year. Unfortunately, past performance is not always an indication of future performance. A portfolio that is out of balance can put your money at undue risk. The result is a constant reevaluation process called Tactical Assets Allocation, which uses many factors to rebalance your assets in reaction to the ever changing market.
How to Rebalance Your Portfolio
The optimal frequency of portfolio rebalancing depends mainly on transaction costs and because at Guardian Plus our transaction cost are low, this benefits you not just in the pocket book. Because of these low costs we are able to actively rebalance your investments. Other companies in the market advocate that usually once a year is sufficient for rebalancing or even longer; however, Guardian Plus extends a watchful eye over your account(s) daily. And with our dynamic management style we are able to make asset allocation changes quickly with the demands of the market.
When determining asset allocation and rebalancing for a Plus+Portfolio we take the following basic steps:
1. We Keep Records – Once you have decided which Plus+Portfolio or asset-allocation strategy is perfect for you, then we keep detailed records of your account(s). For example the total cost of each security at any given time, as well as the total cost of your portfolio. These numbers will provide you with historical data of your portfolio, so at a future date you can compare them to current values.
2. We Analyze – On a continual basis we review the current value of your portfolio and of each asset class. We then calculate the weightings of each fund in your portfolio by dividing the current value of each asset class by the total current portfolio value.
3. We Adjust – If we see opportunities or undue risks in your asset class weightings we might sell securities from asset classes whose weights are too high, and purchase additional securities in asset classes whose weights have declined.
At Guardian Plus we know that dynamically managing and rebalancing your portfolio is integral to your portfolio’s success, and through Tactical Asset Allocation, we provide the most comprehensive management possible to help you meet your financial goals sooner.
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Guardian Plus Inc. is a registered investment adviser in the State of Washington. The adviser may not transact business in states where it is not appropriately registered, excluded or exempted from registration. Individualized responses to persons that involve either the effecting of transaction in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption.