Silgardo suggests that the frequency at which investors rebalance should be dictated by movements in the markets, and how that affects an investor’s asset mix of equities and bonds.
“Five years ago I would’ve said once a year would be good. But monthly or quarterly is not bad,” Silgardo said in the article. “You need to find your own comfort zone. When you create an asset mix, it can change very quickly as markets move.”
“You rebalance when things make sense. When bonds are significantly cheap to equities — assuming it’s just stocks and bonds — you want to put [money]in there and vice-versa,” Larry Berman, chief investment officer and co-founder of ETF Capital Management, added in response to the traditionalists holding onto a 60 equity/40 bond split.
Additionally, Berman cautions investors from becoming overzealous in utilizing inverse/leveraged tools.
“Different ETFs have their place. The leveraged ETFs, the double bulls and double bears are only ever appropriate for very short-term trading, no more than a couple of weeks,” Berman said in the article.
For more information on ETFs, visit our ETF 101 category.
Max Chen contributed to this article.