Rebalancing

Returning a portfolio to its target weights after market movements have shifted them.

A portfolio targeting 60% equities that has drifted to 70% after a strong year sells the excess and buys the underweight assets.

The discipline forces selling what has done well and buying what has not, which is behaviourally difficult and historically rewarded, because it mechanically trades against momentum at the extremes.

Frequency involves a trade-off against costs and taxes. Annual, or on a threshold breach, is the common compromise.

The rule matters more than the schedule.