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When do you rebalance my portfolios?

Rebalancing periodically due to market changes

We rebalance your portfolio periodically whenever we see that any one of the funds in your portfolio has drifted by a certain percentage from its target allocation that is mentioned in your Investment Program. Hence the trigger to rebalance is determined by threshold-based percentage drift. We believe that this method is preferable, instead of having a predetermined period based approach (such as rebalancing once every quarter, or once every year).

We will also consider various other aspects before we rebalance, such as the cash available to rebalance, the prospect and the size of any oncoming dividends, the volatility of each fund in your portfolio, and the impact on capital gains taxation because of rebalancing. Even though QuietGrowth absorbs the trading costs incurred while rebalancing and does not charge the client for these costs incurred, we are mindful of these costs too. Hence we rebalance when the dollar amount of the buy or sell trades to be executed while rebalancing is of a meaningful amount only.

Rebalancing during specific events

We will also monitor your portfolio for rebalancing during specific events. We consider whether we should rebalance your portfolio whenever (a) you deposit funds; (b) you instruct us to withdraw funds; (c) the risk tolerance of the portfolio is changed; (d) we change the target allocation of the portfolio; or (e) you merge another portfolio into the portfolio. We will evaluate whether we can perform threshold-based rebalancing at that time as we determine the exact buy or sell trades of various funds that we might execute.

The relative performance of each of the funds in your portfolio matters a lot towards rebalancing, and hence, we cannot predict when we are likely to rebalance your portfolio. Your dashboard will show by how much percentage each of your funds has drifted from its target allocation.

Refer to our Investment Methodology page for more information.

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