The portfolio preset of your choice comes with target percentage weights for each ETF. Over time, different ETFs will earn different returns due to market movements, meaning that your actual percentage weights will start to differ from your target percentage weights.
Rebalancing is an important process that returns your holdings to the target weights. Essentially, helping you stick to your investing plan regardless of the market fluctuations.
Rebalancing restores portfolio weightings to their target allocations by selling assets that have appreciated and adding to those that have declined. Importantly, it can help reduce risk.
Each ETF position within your portfolio has a rebalance range in which the value of that position can go up or down; if the value of the ETF breaches this range, then a corrective buy or sell order may be triggered. Corrective actions are taken as long as it makes sense to do so with due regard to the overall portfolio.
We will also rebalance your portfolio if your investment strategy or tolerance for risk changes.