If the value of assets in a portfolio changes, rebalancing may be necessary to maintain the asset allocation of your chosen strategy. We do not manage your investments and do not rebalance automatically, but in case of asset imbalance in your portfolio, you will be prompted to initiate rebalancing.
It’s important to rebalance because your selected strategy is designed to maintain a specific allocation, which aligns with your intended level of risk and expected return. If the portfolio drifts from this allocation over time and is not rebalanced, it can affect both the risk profile and the potential returns of your investment, leading to outcomes that may not match your original strategy.
During deposits and withdrawals, you can bring the portfolio to balance. Underweight instruments will receive a larger share of the deposit, while overweight instruments will receive less. During withdrawals, overweight instruments will be reduced first, ensuring withdrawals help rebalance the portfolio towards the target allocation.
For example, You’ve invested EUR 10,000 in the balanced strategy with following asset allocation:
Asset | Target allocation | Asset amount |
Euro | 40% | EUR 4,000 |
iShares Core € Corp Bond UCITS ETF | 10% | EUR 1,000 |
iShares Global High Yield Corp Bond UCITS ETF | 50% | EUR 5,000 |
Over time, one of the assets, the iShares Global High Yield Corp Bond UCITS ETF, rose and added 20% to its value. Now it is valued at EUR 6,000 instead of EUR 5,000. The other assets did not change their value.
Asset | Target allocation | Asset amount | Real allocation |
Euro | 40% | EUR 4,000 | 36.36% |
iShares Core € Corp Bond UCITS ETF | 10% | EUR 1,000 | 9.09% |
iShares Global High Yield Corp Bond UCITS ETF | 50% | EUR 6,000 | 54.55% |
Now we request to rebalance the strategy: sell the asset whose share is too large and buy more assets with an insufficient share if needed.
After clicking the rebalance button, you will receive the necessary proposals for buy and sell orders to re-alignthe current asset allocation with the default of the selected strategy:
Asset | Target allocation | Allocation before rebalancing | Asset amount before rebalancing | Sell/Buy | Asset amount after rebalancing |
Euro | 40% | 36.36% | EUR 4,000 | EUR +400 | EUR 4,400 |
iShares Core € Corp Bond UCITS ETF | 10% | 9.09% | EUR 1,000 | EUR +100 | EUR 1,100 |
iShares Global High Yield Corp Bond UCITS ETF | 50% | 54.55% | EUR 6,000 | EUR -500 | EUR 5,500 |
In case of withdrawal before rebalancing, excess instruments will first be reduced to bring the portfolio into balance by requesting you to submit orders to do so, if possible with the amount of the withdrawal:
Asset | Target allocation | Allocation before withdrawal | Asset amount before withdrawal | Sells in case of withdrawal €500 | Asset amount after withdrawal | Allocation after withdrawal |
Euro | 40% | 36.36% | EUR 4,000 | -0 | EUR 4,000 | 38.1% |
iShares Core € Corp Bond UCITS ETF | 10% | 9.09% | EUR 1,000 | -0 | EUR 1000 | 9.5% |
iShares Global High Yield Corp Bond UCITS ETF | 50% | 54.55% | EUR 6,000 | -500 | EUR 5,500 | 52.4% |
In case of deposit before rebalancing, underweight instruments will receive a larger share of the deposit to bring the portfolio into balance by requesting you to submit orders to do so, if possible with the amount of the deposit:
Asset | Target allocation | Allocation before deposit | Asset amount before deposit | Buys in case of deposit €500 | Asset amount after deposit | Allocation after deposit |
Euro | 40% | 36.36% | EUR 4,000 | +400 | EUR 4,400 | 38.26% |
iShares Core € Corp Bond UCITS ETF | 10% | 9.09% | EUR 1,000 | +100 | EUR 1,100 | 9.57% |
iShares Global High Yield Corp Bond UCITS ETF | 50% | 54.55% | EUR 6,000 | +0 | EUR 6,000 | 52.17% |