How Often Should Value Investors Rebalance Their Portfolios?
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In the world of value investing, where finding undervalued assets is only half the battle, portfolio maintenance plays a crucial but often overlooked role in long-term success. As markets fluctuate, your carefully constructed portfolio will naturally drift from its target allocation, potentially increasing risk or diluting your value strategy. This raises an important question: how often should value investors rebalance their portfolios?
The answer isn't one-size-fits-all, but understanding the principles behind rebalancing frequency can help you develop a strategy that aligns with your investment goals while preserving the essence of value investing—buying quality assets at reasonable prices.
Why Rebalancing Matters for Value Investors
For value investors, portfolio rebalancing serves several critical functions:
1. Maintaining Your Value Discipline
2. Enforcing "Buy Low, Sell High"
3. Managing Risk
The Rebalancing Trade-Off
- Deviation from targets v.s. transaction costs
- Potential risk reduction v.s. potential return opportunities
- Discipline v.s. flexibility
Rebalancing Approaches for Value Investors
Calendar-Based Rebalancing
Threshold-Based Rebalancing
This method triggers rebalancing only when portfolio allocations drift beyond predetermined thresholds.
Common Approaches:
- The 5% rule: Rebalance when any asset class drifts 5% from its target
- The 5/25 rule: Rebalance when an allocation drifts 5% absolutely (e.g., from 20% to 25%) or 25% relatively (e.g., from 20% to 25%)
Hybrid Approaches
Many sophisticated investors combine calendar and threshold methods, checking allocations at regular intervals but only rebalancing when drift exceeds specified thresholds.
Research Insight: Morgan Stanley recommends "implementing an annual rebalance combined with a drift-based rule," finding that this approach yielded "an improvement of 0.38% in annual returns, 0.15% in reduced annual volatility and a 0.07 improvement in the information ratio" in one study.
Special Considerations for Value Investors
Market Volatility and Rebalancing
Contrary to intuition, research suggests that less frequent rebalancing may be more effective during market turbulence. Vanguard's analysis found that annual rebalancing outperformed monthly rebalancing during highly volatile periods, partly because "transaction costs rise during volatile environments, which makes rebalancing an expensive action."
For value investors, who often find their best opportunities during market distress, this suggests restraint rather than reactive rebalancing during market crashes.
Using Cash Flows Strategically
Many investors use new contributions or withdrawals as natural rebalancing opportunities.
Reddit User Insight: "If I'm contributing to it on a frequent basis, then I just rebalance yearly. If I contribute infrequently then I just rebalance when I contribute."
For value investors, directing new investments toward your most undervalued holdings aligns perfectly with your strategy while minimizing transaction costs.
Value + Momentum Considerations
Interestingly, research on European markets found that "a combined value and momentum portfolio remains superior and exhibits lower risk exposure. Consequently, an equal-weighted 50/50 portfolio of value and momentum stocks outperforms on a risk-adjusted basis."
This suggests that value investors who incorporate some momentum elements might benefit from slightly more frequent rebalancing (semi-annually) to capture these diversification benefits.
Rebalancing Mistakes to Avoid
Excessive Trading
Emotional Rebalancing
Ignoring Tax Implications
Developing Your Value Portfolio Rebalancing Strategy
- Portfolio size: Larger portfolios may benefit from more frequent monitoring
- Tax situation: Taxable accounts may require less frequent rebalancing
- Investment style: Deep value investors may need less frequent rebalancing than those employing multiple strategies
- Life stage: Accumulation vs. distribution phases have different rebalancing needs
- Market conditions: Higher volatility environments may warrant wider thresholds
Conclusion
Master Value Investing Analysis
- A deep dive into a fast-growth company case study.
- The key financial metrics used when evaluating whether a stock has strong growth potential
- Step-by-step guide on how to apply the Value Investing Methodology on real-life companies
- The exact criteria that successful investors use when evaluating any company
- How to determine the intrinsic value of a stock so you will know exactly when to enter or exit the market
- How ViA Atlas Intrinsic Value (IV) Directory can get you started on building your own portfolio of superhero stocks, even for busy professionals without much time to spare.
See Value Investing in Action
Presented by Cayden Chang
Founder of Value Investing Academy and Award-Winning International Speaker, Lifelong Learner Award 2008, Personal Brand Award 2017
You will learn:
- A deep dive into a fast-growth company case study.
- The key financial metrics used when evaluating whether a stock has strong growth potential
- Step-by-step guide on how to apply the Value Investing Methodology on real-life companies
- The exact criteria that successful investors use when evaluating any company
- How to determine the intrinsic value of a stock so you will know exactly when to enter or exit the market
- How ViA Atlas Intrinsic Value (IV) Directory can get you started on building your own portfolio of superhero stocks, even for busy professionals without much time to spare.
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Through the past 40 years, MILLIONS of people have attended his live seminars and his graduates have earned BILLIONS in profits by following his financial advice. Today there are literally thousands of millionaires and multi-millionaires worldwide who attribute their success to Mr. Allen’s systems and strategies. Empowered by his philosophy of the Enlightened Entrepreneur, his students have generously contributed over 50 million dollars to their favorite churches, causes and charities.
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Ernee Ong is the co-founder of Proptiply, a property consulting and investment education company that builds on the concept of co-living to generate rental income. He aims to educate and empower aspiring property investors to attain their life goals through prudent and sound property investing principles.
Ernee is a loving husband to Jelene and a father to two wonderful daughters. Alongside Jelene, he is a co-founder and the driving force behind Proptiply™.
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Vincent is a financial planner who specializes in investment and retirement planning. He helps people achieve their financial goals and dreams through comprehensive and customized solutions.
He has nearly a decade of experience in the financial services industry and is a Certified Financial Planner, CFP®. He is passionate about educating people on the importance and relevance of financial planning in today's world.
He grew up in Toa Payoh, a mature estate in Singapore, witnessing many senior citizens struggle with health and financial issues. They often told him that "it's better to be dead than to be sick in Singapore". This made him realize the value of money and motivated him to learn about investments at a young age. Later, he discovered the financial planning industry and decided to pursue it as a career.
He loves what he does because he makes a positive difference in people's lives. Whether it's helping them grow their wealth, protect their income, or plan for retirement, he enjoys seeing them achieve their desired outcomes and live their best lives.
Self-made Millionaire Investor
Liu Feng

Liu Feng graduated from Beijing University and came to Singapore in 1994, and went from having a mere S$100 in his wallet to becoming a millionaire. Armed with a strong determination, he made the majority of his fortune through Value Investing using principles created by Warren Buffett, one of the richest man in the world. Across the years, he has accumulated extensive experience and in-depth knowledge in stock investing.
Liu Feng specialized in stock investment. Since he first read a book about Warren Buffet in 1996, he has since done extensive studies on Value Investing Gurus – Benjamin Graham, Philip Fisher, Peter Lynch and John Neff. Through continuously fine-tuning his investment model, combined with his investment experience, he has founded a set of Investment Philosophies, Value Investing Principles and Methodologies to create passive income. Those who have been taught by him have found his teaching easy to understand as well as benefited from his many years of experience and insight on stock investments.
As an experienced value investor, Liu Feng incorporates real case studies of numerous Singapore-listed companies in his training, coupled with a systematic and proven methodology to provide a distinct advantage in the stock market.
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Lauren C. Templeton is the founder and Chief Executive Officer of Templeton & Phillips Capital Management, LLC. Prior to founding the firm in 2001, Lauren was employed with Morgan Stanley, Homrich Berg, and New Providence Advisors, a hedge fund management company, based in Atlanta, GA.
“Author of “Investing the Templeton Way: the Market Beating Strategies of Value Investing's Legendary Bargain Hunter”, Lauren is also the great niece of Sir John M. Templeton and is a current member of the John M. Templeton Foundation, established in 1987 by renowned international investor, Sir John Templeton. She began investing as a child under the heavy influence of her father as well as her late great-uncle, Sir John Templeton.
About Sir John Templeton
Sir John Marks Templeton was born in 1912, in the small town of Winchester, Tennessee. He attended Yale University and graduated near the top of his class and as President of Phi Beta Kappa. He was named a Rhodes Scholar to Balliol College at Oxford, from which he graduated with a degree in law.
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Todd A. Finkle, Ph.D. is the Pigott Professor of Entrepreneurship at Gonzaga University. He has taught for 34 years at 4 different universities, publishing more than 270 articles, books, presentations, and grants.
Dr. Finkle is an expert on Warren Buffett and Entrepreneurship. His recent book titled," Warren Buffett: Investor and Entrepreneur," is published by Columbia University Press. The book traces the entrepreneurial paths that shaped Buffett’s career, from selling gum door-to-door during childhood to forming Berkshire Hathaway and developing it into a global conglomerate through the imaginative deployment of financial instruments and creative deal making.
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Cayden Chang is the Founder of Mind Kinesis Investments Pte Ltd and Value Investing Academy Pte Ltd, which runs the first and only Value Investing training that is recommended and endorsed by Mary Buffett, the internationally acclaimed author and speaker of how billionaire Warren Buffett invests. His company also runs Value Investing workshops across Asia. With over 50,000 graduates across 11 cities in Asia, his methodology is tested, proven and easily duplicable even for someone who has no prior experience in investing.
Cayden holds two Bachelors’ Degrees and a Masters Degree from National University of Singapore. He has also been trained in value investing by Professor Bruce Greenwald in Columbia University, the institution where Billionaire investor Warren Buffett met Professor Benjamin Graham, as well as by Professor George Athanassakos, the finance professor who holds the Ben Graham Chair in Value Investing at the Richard lvey School of Business, University of Western Ontario.
Cayden has also received the Lifelong Learners Award 2008 from the Minister of Manpower on 18 November 2008, Mr Gan Kim Yong and he was featured in “TODAY” newspaper, “938Live Online News”, “938Live Radio Station”, “Mediacorp Xin.Sg” and “The Straits Times”. He was subsequently featured in “938Live Breakfast Club” Radio, “Channel News Asia AM Live”, “Shareinvestment”, “The Edge”, and “The Exquisite” Magazine for sharing his secrets of financial success.
In July 2010, he was diagnosed with Renal Cancer. Despite being ill, he launched his first charity project in August 2010, where he donated all of the sales proceeds of his book to The Straits Times School Pocket Money Fund, and was featured on 938 Live Radio Station and The Straits Times. His fight with Renal Cancer was subsequently published in The Straits Times and interviewed on 938Live Radio Station. His life story was featured in The Sunday Times on 10 June 2012. He survived terminal stage Renal Cancer (Stage 4) in September 2014 and launched his second book titled “The Book of Hope” to raise funds for cancer research.
