Portfolio Rebalancing for the Timid

While rebalancing in a pure form will do a better job of controlling risk, these strategies can help add a contrarian tilt to a portfolio

Christine Benz 30 March, 2015 | 11:30AM
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The audience who had turned out for my session on retirement planning looked at me like I had three heads.

After all, I had just shown them a slide depicting miserly yields on high-quality bonds—2% or lower, in most cases. I had also discussed how to do a "duration stress test" of their bond holdings; my example featured a long-term government bond that would likely experience a double-digit drop if rates jumped up by one percentage point.

So, why on earth would I suggest that they rebalance their portfolios into...gulp...bonds?

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Artemis Strategic Assets R Acc0.77 GBP-1.01Rating
M&G Episode Growth GBP A Inc66.00 GBP0.06Rating
Ninety One Cautious Managed A Acc413.84 GBP0.24Rating

About Author

Christine Benz

Christine Benz  is director of personal finance at Morningstar and author of 30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances.