Typically in the generic world of asset allocation, the rebalancing or reallocation of asset classes is automatically triggered daily, weekly, etc. This very important aspect of investing is computerized and implemented without any forethought.
The fallacy of automating this process is the potential upside limitation of outperforming asset classes. Conversely, this could increase the allocation of underperforming asset classes at an inopportune time.
Our portfolio management team utilizes tactical strategies for rebalancing asset classes after serious deliberation of evolving investment themes. The tactical implementation is unscheduled and only takes place after our team agrees there is a compelling reason to underweight or overweight an investment. We have developed the following strategies for rebalancing:
Thematic: Identifying compelling macro themes
Opportunistic: Capitalize on volatility and market inefficiencies
Contrarian: Avoid the herd mentality of the consensus