Rebalancing (finance theory)
Rebalancing ( German reweighting ) is the reallocation of financial investments in order to restore an asset allocation to be achieved ( asset allocation ). So there is no buy-and-hold.
If an asset allocation is realized, it will deviate from the original state over time due to different performance of the individual asset classes. The target allocation must then be restored by reallocating funds between the asset classes of the portfolio. Practical obstacles for this are the transaction costs incurred and possible tax disadvantages (exchange rate gains must be taxed, exchange rate losses can be deducted).
In the case of an active investment strategy, reallocations are made when new public information becomes known (ex ante e.g. about the interest rate or the composition of the underlying index such as DAX ) or when the relative shares are shifted due to price gains (ex post, e.g. B. 40/60 strategy ).