What is a rebalance and why is it important?

The Investment Champion portfolios are designed to take some of the stress out of making investment decisions.

Choosing where to invest can feel like a minefield, with many options and little guidance on what may be best for you. Our portfolios are designed by the experts at The Private Office (TPO) Investment Team who choose the funds and investments that will go into each one.

But what happens after you've invested, in the months and years to come? The portfolios go through a regular process called 'rebalancing'. No portfolio is forgotten, it's simply rebalanced.

Why is rebalancing important?

When you make an initial investment with us, you will likely choose how much you want to invest in the portfolio of your choosing, once you've considered how much risk you're happy to take.

As different types of investments perform at different levels and times, after a while you could find that the percentage of the assets you hold within your portfolios become skewed, which can change the risk of your investment.

How does rebalancing work? 

At Investment Champion, on the first working day of the month in May and November, a rebalance takes place. As this happens at pre-determined points, it is called mechanical rebalancing; this process makes sure that your model portfolios are brought back in line with the original allocation at pre-determined twice yearly intervals. 

How much does it cost?

Put simply, it depends!  That is why we can only provide an estimate for average transaction costs at the outset - 0.06%.  Depending on market movements and how this impacts the funds that make up your chosen portfolio, the volume and value of transactions may vary.  But don't worry, the estimate is based on many years of experience and historic information.

The most important factor is that we maintain the correct asset allocation as described in the portfolio, so that we don't expose our customers to more risk than they are comfortable with.