Due to the nature of investments those that are risky generally produce a higher return over time. If they do not, then no one will accept the higher risk. This therefore suggests that without regular rebalancing, the risk of one’s portfolio will increase as time passes.

It is important that a portfolio is rebalanced at regular intervals, resetting the asset allocation as agreed at outset.

The discipline of rebalancing is therefore very different to making calls on the future direction of markets or the “churning” effect seen in some traditional stockbroking accounts.