Optimal Rebalancing Frequency for Bond/Stock Portfolios

November 2006
Journal of Financial Planning;Nov2006, Vol. 19 Issue 11, p44
Academic Journal
The article discusses the optimal rebalancing frequency for bond/stock portfolios. Using data from the years 1926-2003, the authors examine the return/risk ratio for 19 different bond/stock portfolios to reveal their performance at varying levels of rebalancing. Rebalancing frequency and threshold have a significant effect on scaled return, with rebalancing deferment often preferable to monthly and quarterly rebalancing policies. However, financial planners should note that the best rebalancing policy is dependent on the Federal Reserve's monetary policy.


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