Why Rebalancing Your Investment Portfolio Matters More Than You Think
Over time, even the most carefully constructed investment portfolio can drift off course. Market movements can cause certain assets to grow faster than others — leaving your original balance between risk and return out of alignment.
Regularly rebalancing your portfolio ensures it remains true to your long-term objectives, risk tolerance, and investment strategy.
What is Rebalancing?
Rebalancing is the process of realigning your investments back to their target allocations.
For example, if your portfolio was originally 60% equities and 40% bonds, strong stock market growth might increase your equity exposure to 70%. Without adjustment, your portfolio would now be taking on more risk than you initially intended.
Rebalancing involves selling a portion of the assets that have grown beyond their target weight and reinvesting into those that have underperformed — restoring your desired balance.
Why It’s Especially Important Right Now
In recent years, a small group of technology giants — often referred to as the “Magnificent 7” (Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta, and Tesla) — have driven a significant portion of global market returns.
Their rapid growth has meant that these few companies now make up a large percentage of many investors’ portfolios, even for those who invest through diversified global or US equity funds.
As a result, you may find yourself overexposed to US equities and technology without realising it. A handful of high-performing stocks dominating your returns can skew your portfolio’s balance and increase your risk concentration.
Regular rebalancing helps reduce this unintended exposure, ensuring you remain diversified across sectors, regions, and asset classes.
The Benefits of Regular Rebalancing
1. Keeps Your Risk Level Consistent
Your portfolio’s risk profile changes as markets move. Rebalancing helps you maintain a consistent level of risk, protecting you from becoming unintentionally overexposed to volatile asset classes or specific sectors.
2. Locks In Gains and Enforces Discipline
It’s a natural tendency to let winners run. However, disciplined rebalancing helps you take profits from overperforming assets (like the Magnificent 7) and reinvest into areas with better long-term value — a strategy proven to improve returns over time.
3. Improves Long-Term Performance
Studies show that investors who rebalance regularly can achieve smoother long-term growth by avoiding extreme fluctuations in portfolio value. It’s not about timing the market — it’s about maintaining structure through all market cycles.
4. Reduces Emotional Decision-Making
Rebalancing enforces a systematic, rules-based approach, helping you avoid emotional reactions to short-term market noise.
5. Aligns Your Portfolio With Life Changes
Your goals, income, and time horizon may evolve — particularly as an expat navigating multiple currencies and jurisdictions. Regular reviews and rebalancing ensure your portfolio remains aligned with your financial plan and lifestyle.
How Often Should You Rebalance?
For most investors, reviewing and rebalancing at least once or twice per year is sufficient. However, significant market movements or changes in your personal circumstances may warrant a review sooner.
At Futurus Global Wealth, we conduct quarterly reviews for our clients, ensuring their portfolios remain balanced, efficient, and optimised for performance and protection.
Ready to Review Your Portfolio?
If you haven’t rebalanced your investments recently, now is a good time to ensure your portfolio is still working for you and not against you.
Simply complete our contact form below and one of our qualified advisors will contact you in order to schedule your no obligation review.