RT Journal Article
SR Electronic
T1 The Implications of Rebalancing the Investment Portfolio for the Taxable Investor
JF The Journal of Wealth Management
FD Institutional Investor Journals
SP 49
OP 53
DO 10.3905/jwm.2002.320443
VO 5
IS 2
A1 Jeffrey E. Horvitz
YR 2002
UL https://pm-research.com/content/5/2/49.abstract
AB Rebalancing is almost universally recommended as a method to control risk and to orient the investment portfolio to its appropriate risk/return point. The literature on rebalancing is effusive as to the benefits, but there is little commentary about the costs or the practical problems of implementation. Rebalancing is easiest with portfolios consisting of all liquid securities, which is the case with the conventional mix of stocks, bonds, and cash. Most institutional investors and many individuals include in their portfolio a substantial amount of illiquid investments such as private equity, venture capital, and real estate. These cannot be so easily rebalanced and there may be little point in rebalancing only those portions of a portfolio that are liquid, leaving the illiquid portions untouched.