It is a common strategy to rebalance your investment portfolio in order to reduce investment risk and lock in the profit. This is especially true when investing in unit trust, which is the easiest way to get you started investing in various classes of investment vehicles without much up-front capital.
Now, the question is: How often should you rebalance?
Annually? Monthly? or even weekly?
For the sake of convenience, most investors prefer to rebalance their portfolio in a yearly basis. Moreover, if switching and repurchasing of funds are involved, you will need to pay extra administration fees, which eventually eats into your portfolio returns.
The research team at Fundsupermart had conducted a research to observe if more frequent rebalancing will improve returns.
- The best return is obtained on annual rebalancing.
- The shocking result is that the more frequent you rebalance, the return drops, although not significantly.
It shows that you can do more with less – get higher return with less rebalancing.
If you are interested to read the four page report, download the pdf file here.