At Intech, we’ve been studying the power of rebalancing for more than 30 years, and applying that knowledge for almost as long. This presentation will explain how rebalancing exploits the natural volatility of stocks within a portfolio to potentially increase the compound return; locks in the gains from diversification, which otherwise might be lost; and keeps a portfolio diversified, helping to mitigate overall portfolio risk. We will also discuss why successful rebalancing does not depend on mean reversion of stock prices, and how the stability of the market structure makes it unlikely that a buy-and-hold portfolio will outperform the rebalanced approach in the long term.
