Your Investments Don’t Know It’s Review Day - So Why Rebalance by a Diary?
Peter McGahan
Monday 22nd June, 2026.
THINK about this. Carefully.
I have never understood why your pensions or investments should behave themselves because of an investment diary review date. Should stock markets know how to behave just because you have a date in your diary?
A calendar review is tidy. It gives everyone a meeting, a report, perhaps a cup of coffee, and the comforting sense something formal has happened. But markets, fund managers, exchange rates, sectors, tax rules and clients’ lives do not move on the third Tuesday after Easter because my office system prefers it that way.
The better question is: “Has anything changed which means this portfolio no longer maximises your returns or minimises losses?”
Rebalancing is often described as trimming winners and topping up losers, but that is only one part of it. Realignment can be needed because one fund has grown too large, one geography has come to dominate, a sector has quietly swollen, a fund manager has left, a fund has changed its process, charges have altered, a client has retired, inherited money, lost income, changed objectives, or simply no longer has the same capacity to absorb loss.
None of that waits for December 12 at 2.30pm.
The regulator appears to understand this direction of travel. In March 2026, the FCA proposed replacing the annual suitability review requirement with periodic reviews based on client needs. I agree. The consultation says firms providing ongoing advice would determine the appropriate review frequency based on customer needs and circumstances, in keeping with Consumer Duty (the regulatory piece that looks after you). It also warns that a fixed minimum frequency can encourage a tick-box, compliance-led approach rather than an outcomes-focused one. I agree, and it also moves away from the real value add – excellent investment research and the correct time to rebalance.
The investment evidence points the same way. Disciplined rebalancing improves risk-adjusted returns compared with never rebalancing, but that more frequent calendar tinkering is not better. Vanguard’s work found monthly and quarterly rebalancing created higher transaction costs than annual or threshold-based approaches, without any improvement in risk-adjusted results. Other research showed that triggering a review when a 5 per cent drift trigger occurred produced stronger risk-adjusted results than a looser 10 per cent trigger. The message is not “trade more”. It is “Act when there is a reason. Not a calendar date”.
That is especially clear during market shocks. A portfolio set at 60 per cent equities and 40 per cent bonds can move a long way in a few weeks. During a sharp fall, the equity weighting may drop below target, creating an opportunity to buy cheaper units and restore
the intended risk level. During a long bull market, equities can quietly rise from a balanced allocation into something far more aggressive. Vanguard’s historical examples show a 60/40 portfolio left alone can drift towards 80/20 over time. That is not the same portfolio at all.
Calendar rebalancing is blunt because the calendar has no idea what has changed. A portfolio may suffer a sharp market fall, a star manager may leave, or a single region or sector may become too dominant in April, yet a calendar-only process may do nothing until September. Rebalancing should be triggered by evidence which the portfolio is no longer aligned with its purpose, not by a date which knows nothing.
Fund manager changes are a good example. If a genuinely important manager leaves an active fund, the fund you own may not be the fund you bought. Morningstar places funds under review when managers change; it does not wait for the next annual rating ceremony. The evidence shows that top-performing UK funds often suffered a notable fall in benchmark-adjusted performance after star manager departures. A six-month wait for the next review may be six months holding a fund whose original case has changed.
Geography is another. A “global” equity allocation in 2010 was not the same as a global equity allocation in 2024 if the US weighting has moved from roughly the low-40s to around 70 per cent of the index. That may still be acceptable, but it should be a conscious position, not something which happened while everyone admired the performance chart while eating popcorn.
So, the sensible answer is a hybrid discipline. Monitor regularly. Act only when something has genuinely changed as above.
The best rebalancing date is not a set moment in time. It is the moment the evidence says the portfolio is no longer aligned with its purpose.
I will be creating a guide to investing, so, if you would like a complimentary copy, please email info@wwfp.net. If you have a financial enquiry, please call 01872 222422.
Peter McGahan is the Chief Executive Officer of Independent Financial Adviser firm, Worldwide Financial Planning. Worldwide Financial Planning is authorised and regulated by the Financial Conduct Authority.
