Should I rebalance? How often should I rebalance my portfolio?
Portfolios drift naturally as some assets outperform others. Rebalance annually or when any allocation drifts more than 5% from target to keep your risk level aligned with your plan. Inside an ISA or SIPP you can rebalance freely; outside wrappers, use new contributions or dividends first to minimise tax.
Why portfolios drift and why it matters
A 70/30 portfolio can become 80/20 after a strong equity run, leaving you unintentionally taking more risk.
Two rebalancing approaches
- Calendar-based (e.g. once a year)
- Threshold-based (when drift exceeds 5%)
A hybrid of both works well for most investors.
The tax-efficient way to rebalance
Inside tax wrappers: rebalance freely. Outside: direct new money to underweight assets, redirect dividends, or use Bed & ISA transfers where appropriate.
Key takeaway: Rebalancing forces you to sell winners and buy laggards — the opposite of what feels comfortable, but one of the most effective ways to control risk over time.
Arken tracks your current allocation versus your target, shows the drift, and recommends the most tax-efficient trades needed to restore balance.
