At a time when investors are concerned equities are overvalued, the prospect of near-zero returns is a lot more appealing than a significant downturn in shares.
Rebalancing is such a simple concept from an investor’s viewpoint. You set a target asset allocation that suits your personal risk profile and long-term financial goals. Then as markets or specific investments move up (or down) in value, you periodically review and adjust to bring the asset allocation back into line.
It is a simple concept that is also executed by diversified multi-asset-class options in leading super funds, exchange traded funds and managed funds, proving that the inherent simplicity of rebalancing does not mean it is any less meaningful in a professionally managed investment option.
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Robin Bowerman is head of market strategy at Vanguard Australia.
