Rebalancing can’t save the world, but perhaps it can bring salvation to portfolios in the long run. History certainly suggests as much.
By opportunistically selling asset classes that have rallied and buying those that have lagged, a disciplined approach to rebalancing a broadly diversified portfolio of beta may best deal in money management. The reason, as Charlie Ellis famously counseled, is that the best way to win over time is by not losing.
With that in mind, what opportunities currently avail themselves for those inclined toward rebalancing? As our table below suggests, the pickings remain slim based on recent history. Investors looking for obvious candidates to sell based on year-to-date returns through April 6 will note the leader as MSCI EAFE, represented here by the iShares ETF tracking the index. Year to date, the ETF has climbed 6.2%. It’s debatable whether that’s enough of a run to warrant the associated trading costs and taxes that would come from paring the position and reallocating elsewhere.
