Trading glossaryReviewed 16 July 2026
Definition
Rebalancing adjusts portfolio holdings toward a target asset allocation after market movement or changed circumstances cause exposures to drift over time.
In market context
It can be performed on a schedule, when weights cross set bands, or after a material change in goals and constraints. Rebalancing may involve selling recent outperformers and buying underweighted assets, which can create taxes, fees, spreads, and timing risk. It restores a chosen risk structure rather than forecasting the best-performing asset, and the target itself should be reviewed for continued suitability.
Source
Use the primary source for fuller regulatory or market context.