Portfolio rebalancing

Portfolio rebalancing helps you maintain your target asset allocation by identifying trades needed to align your holdings with your goals.

What is rebalancing?

Over time, some investments grow faster than others, causing your portfolio to drift from your intended allocation. Rebalancing is the process of buying and selling to restore your target percentages.

Why rebalance?

• Risk management — Prevents any single position from dominating your portfolio
• Discipline — Forces you to "buy low, sell high" systematically
• Alignment — Keeps your portfolio matched to your strategy and risk tolerance

Accessing rebalancing

1. Open any portfolio
2. Navigate to the Rebalancing tab in the portfolio menu
3. Review your current rebalancing score

The rebalancing page shows three sections:

• Rebalancing score
• Target allocations
• Trade recommendations

Understanding your rebalancing score

The rebalancing score (0-100) measures how well your portfolio aligns with your targets:

Score	Status	Meaning
95-100	Excellent	Portfolio is well-aligned
80-94	Good	Mostly aligned, minor adjustments may help
60-79	Fair	Consider rebalancing
0-59	Poor	Significant deviations from targets

The score appears at the top of the page with:

• Your portfolio value
• Percentage of unallocated targets
• Total number of holdings

Setting target allocations

Define what percentage of your portfolio each holding should represent.

To set targets

1. Use the filter to show holdings above a minimum weight (e.g., 1%)
2. Enter target percentages for each holding you want to include
3. Leave holdings blank to exclude them from rebalancing
4. Click Save to store your targets

Allocation guidelines

• Total targets can be up to 100%
• You don't need to allocate 100% — leaving some unallocated gives flexibility
• Common strategies:
  • Equal weight — Same percentage for each holding
  • Market cap weight — Larger companies get higher percentages
  • Strategic — Based on your investment thesis
  • Core-satellite — Large allocations to core holdings, smaller for satellites

Example: In a 10-stock portfolio, you might target 15% for your top 3 holdings, 10% for the next 3, and 5% each for the rest. This totals 90%, leaving 10% unallocated.

Tips for setting targets

• Start with current weights, then adjust based on your goals
• Round to 0.5% or 1% increments for simplicity
• Review quarterly or when positions drift significantly
• Consider sector and market exposure, not just individual stocks

Viewing trade recommendations

Once you've set targets, trade recommendations appear automatically.

What you'll see

The trade recommendations section shows:

Column	Meaning
Symbol	Stock to trade
Action	BUY or SELL
Current	Shares you currently own
Shares	Number of shares to trade
Price	Current price per share
Value	Total value of the trade
Weight change	Current % → Target %

Summary metrics

At the top of recommendations:

• Total to sell — Cash you'll receive from sales
• Total to buy — Cash needed for purchases
• Net cash needed — Additional capital required (if positive)

Adding cash to invest

Use the cash input field to model adding new capital:

1. Enter the amount of cash you plan to invest
2. Click Recalculate
3. Recommendations update to include your new capital

This helps you plan periodic investments while rebalancing.

No trades needed

If you see "Portfolio is balanced," your holdings are within acceptable thresholds of their targets. No action is required.

Executing trades

TrackMyShares provides recommendations but doesn't execute trades. You'll need to:

1. Review the recommended trades
2. Place orders through your broker
3. Record the transactions in TrackMyShares (for transaction-based portfolios)
4. Or update your holdings manually (for basic portfolios)

Note: Recommendations use current prices which may change. Fractional shares are rounded down. Always review before trading.

Best practices

When to rebalance

Common rebalancing schedules:

• Calendar-based — Quarterly, semi-annually, or annually
• Threshold-based — When any position drifts 5-10% from target
• Hybrid — Check quarterly, rebalance only if thresholds exceeded

Tax considerations

Rebalancing may trigger capital gains tax:

• Prefer selling positions with losses or minimal gains
• Use tax-advantaged accounts (ISAs, super) when possible
• Consider the tax impact before trading
• See Tax loss harvesting for related strategies

Transaction costs

Frequent rebalancing incurs:

• Brokerage fees
• Bid-ask spreads
• Currency conversion fees (for international stocks)

Balance rebalancing benefits against these costs.

Filtering holdings

The filter helps manage large portfolios:

• Set minimum weight (e.g., 1%) to hide small positions
• Focus on your core holdings
• Small positions often self-correct over time

Rebalancing strategies

Conservative approach

• Set targets matching current allocation
• Allow wider drift thresholds (10-15%)
• Rebalance annually
• Minimises taxes and fees

Active approach

• Target specific strategic allocations
• Tighter thresholds (5%)
• Rebalance quarterly
• More tax events but stays aligned

Growth approach

• Let winners run (don't sell gains)
• Use new capital to buy underweight positions
• Rebalances through additions rather than sales
• Tax-efficient but slower to rebalance

Consolidated portfolios

For consolidated portfolios (combining multiple source portfolios):

• Targets apply to aggregated holdings across all sources
• Recommendations show net positions
• Execute trades in appropriate source portfolios
• Individual portfolio allocations may differ from consolidated targets

Troubleshooting

"Over-allocated" warning

If total targets exceed 100%:

• Reduce some target percentages
• Decide which positions should be smaller
• Save again once total is ≤ 100%

Recommendations keep changing

Recommendations update based on current prices:

• Prices fluctuate throughout the day
• Large movements change calculations
• Use recommendations as a guide, not exact instructions

Can't save targets

Check that:

• You're on a PRO plan (rebalancing requires PRO)
• Total allocation doesn't exceed 100%
• Percentages are in valid range (0-100)

Related features

• Reading your portfolio charts — Use allocation charts to identify rebalancing needs
• Using tax loss harvesting — Combine rebalancing with tax-loss harvesting
• Generating tax reports — Understand tax impact of rebalancing trades