The crucial role of portfolio rebalancing in long-term investment success

Whether it’s for individual or institutional investors, the strategic asset allocation — between stocks, bonds, cash and alternatives — of an investment portfolio is typically the most important determinant of long-term performance. Initially set to align with an investor’s risk, return and liquidity objectives, as market conditions fluctuate, portfolio weights of each allocation drift away from long-term targets, necessitating periodic rebalancing back to the original (or revised) allocation. Despite the need, few investors optimize rebalancing strategies, introducing an important source of inefficiency — and opportunity — into portfolio implementation. 

There is no single best approach to rebalancing an investment portfolio, and your rebalancing solution should be tailored to your wealth management needs. For many investors, large or small, the key to rebalancing success can be found in working with a CIBC representative with rebalancing expertise and how they answer two crucial questions: When to rebalance and how to rebalance.

In “Rebalancing as a component of efficient portfolio implementation” our Structured Solutions Research team explores the importance of rebalancing and outlines how they’re guided in their rebalancing decisions for institutional investors.