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Traditional portfolio rebalancing can feel like a chore. Quarterly, semi-annual, or annual updates typically require logging into multiple portals, sifting through brokerage statements, manually copying and pasting numbers into a spreadsheet, creating complex spreadsheets that handle asset allocations and asset locations, and making time-consuming decisions to restore your target allocations. Not only is this process tedious, but it can leave you vulnerable to missed opportunities and suboptimal returns in between those scheduled adjustments.
However, this approach can lead to 2 major faults:
Relative rebalancing, absolute thresholds, and accuracy metrics are techniques for deciding when a portfolio should be adjusted. Absolute thresholds use fixed percentage points for all holdings. This means a 10% allocation is rebalanced with a more appropriate, narrower band (e.g., ±2%) than a 50% allocation (e.g., ±10%), allowing for more responsive and precise adjustments as market dynamics unfold. Accuracy metrics offer a single score for overall alignment with targets, which provide a simple way of understanding whether a rebalance is necessary or not. Relative rebalancing sets thresholds proportionally for each asset, potentially allowing for adjustments that better reflect the characteristics of each holding.
Relative rebalancing thresholds provide a more targeted approach than absolute thresholds or broad “accuracy” metrics when optimizing portfolio allocations. Instead of triggering a rebalance only when an asset allocation drifts by a fixed number of percentage points—regardless of its original weighting—relative thresholds adjust based on the proportional size of each holding. By focusing on how much each asset deviates from its own target, relative thresholds empower the portfolio to seize true “buy low, sell high” moments at the individual asset level, instead of waiting for all allocations to breach a one-size-fits-all trigger.
Research described by Kitces outlines how relative bands immediately identify when a particular holding has deviated meaningfully, regardless of portfolio size, leading to smarter, timelier rebalancing—especially in diversified portfolios with small and large allocations.
This approach is supported by academic literature and whitepapers from Vanguard (1 and 2), which indicate relative rebalancing not only improves risk control, but also reduces unnecessary trades, minimizes transaction costs, and helps maintain the intended risk-return profile more efficiently. In contrast, relying on a single “accuracy” score or absolute deviation can mask significant risks—especially when small allocations drift—and often leads to missed opportunities.1
Scheduled rebalancing means reviewing and adjusting portfolio allocations on a regular calendar—like monthly or semiannually. This approach is simple and can help maintain a consistent process, but it may miss opportunities to respond to significant market shifts in real time. Opportunistic rebalancing, by contrast, monitors allocations more frequently, making changes only when specific assets drift meaningfully from their intended targets. Research by TD Ameritrade suggests that opportunistic rebalancing can capture sporadic “buy-low, sell-high” scenarios, potentially controlling risk and increasing returns by 1-2% annually compared to strict time-based rebalancing. Compounded that can lead to a 30% gain over 30 years.
Still, the choice between scheduled and opportunistic methods involves trade-offs. While opportunistic rebalancing is more responsive, it can lead to increased trading and costs. Investors should consider their objectives and constraints before deciding which approach suits their needs; neither method guarantees better performance or outcomes in every market environment
The Enrich App enables opportunistic rebalancing by default (though you can revert to periodic checks if you like). It also enables relative rebalancing, where you just set how sensitive you want the rebalancing approach to be. With the Enrich App, these advanced rebalancing techniques are not something you need to program and maintain in a spreadsheet, they are easy to toggle on and off - so you can implement whichever strategy makes sense to you. With Enrich you can focus on growing your investments while staying in control.
1 This approach does not guarantee improved outcomes in every scenario. Different strategies may result in different trading frequencies, costs, and risks. When choosing a method, investors should weigh their goals, risk tolerance, and other constraints. Rebalancing can involve costs and may have tax impacts, and no strategy can ensure specific results