PT - JOURNAL ARTICLE AU - Seth J. Masters TI - Rebalancing AID - 10.3905/jpm.2003.319883 DP - 2003 Apr 30 TA - The Journal of Portfolio Management PG - 52--57 VI - 29 IP - 3 4099 - https://pm-research.com/content/29/3/52.short 4100 - https://pm-research.com/content/29/3/52.full AB - While the power of rebalancing to improve returns and reduce risk is generally acknowledged, there is relatively little work focused on the best way to implement a rebalancing policy. Most rebalancing policies use arbitrary “one size fits all” rules, and the more sophisticated approaches that have been proposed involve complex calculations. The author's simpler methodology allows investors to tailor their rebalancing policies to their risk tolerance, the cost of rebalancing, and the risk characteristics of each asset class in the portfolio. This approach addresses not only when to rebalance, but also how far back to rebalance. The result is a set of easily implemented rules for adhering to a rebalancing discipline.