Rebalancing band

The range either side of a target weight within which no action is taken, so the portfolio is only adjusted when drift becomes meaningful.

Example

A 60% equity target with a quarter-either-side relative band is left alone between roughly 45% and 75%.

Wide bands mean fewer trades and lower cost. Narrow bands fire on ordinary noise and pay real money for precision the plan does not need.

Rebalancing — Buying or selling to bring a portfolio back to its intended mix after markets move it out of shape.
Asset allocation — The split of capital across broad asset types - equities, bonds, property, cash - expressed as target percentages. The decision that sits above choosing individual holdings.
Position size — How much of your total capital a single holding represents - the weight that decides how much any given move actually matters to you.

Rebalancing: returning to the plan — Left alone, a portfolio drifts towards whatever has done best - which is the same as drifting towards a bet on the recent past continuing. Rebalancing is the small, unpleasant act that undoes it. (9 min)