Rebalancing means bringing a portfolio back toward the split you selected between equities, bonds, cash and any additional holdings. It is not a market forecast. It is a discipline that prevents a portfolio from being gradually dominated by whatever has risen or fallen the most.
Short answer
A useful rebalance starts with a written target allocation. Review it on a fixed date or when a material drift appears. The purpose is not to sell the best-performing asset. It is to keep the level of risk consistent with your time horizon, Swiss-franc commitments and ability to tolerate a drawdown.
Step 1: Write down the target allocation
List the main portfolio buckets and the job of each one. Global equities may serve long-term growth, Swiss holdings may express a deliberate domestic tilt, and cash may cover near-term needs. Without this map, you cannot tell whether the portfolio has drifted.
Do not copy an allocation from a headline. FINMA advises investors to understand an investment and to diversify rather than concentrate everything in a single idea.
Step 2: Measure the current weights
At one date, calculate each bucket as a share of total portfolio value. Look behind fund labels too: several funds can hold the same large companies, while Swiss securities may already be a significant part of your income or pension exposure.
Keep categories simple. The aim is not artificial precision but a clear view of whether a bucket has become larger than its intended role. See global ETFs versus the SMI for the difference between global and Swiss exposure.
Step 3: Set a trigger rule
Choose a review cadence in advance, such as once or twice a year, together with a tolerance band. A written rule is more reliable than a reaction to the news. If the drift is small, doing nothing can be the right choice.
Avoid rebalancing after every volatile session. That turns a long-term strategy into a series of emotional decisions.
Step 4: Use new contributions first
When an imbalance appears, new contributions may sometimes be enough to reinforce the underweight bucket. It can limit unnecessary transactions while keeping the plan easy to follow. It will not solve every drift, but it is often the first lever to assess.
If you invest regularly, connect this step to your ongoing schedule. The Swiss DCA guide helps keep that rhythm central.
Step 5: Check the consequences before an order
Before selling or buying, revisit the role of the bucket, liquidity needs, tax documents to retain and the order type you intend to use. Rebalancing is not a reason to take execution risk or rush into a trade you do not understand.
Keep a short record: date, observed drift, action and rationale. It helps you remain consistent at the next review.
Common mistakes
Frequently asked questions
Should I rebalance every month?
Not necessarily. Excessive reviews can invite unnecessary action. A fixed date and tolerance band usually make it easier to distinguish normal variation from a meaningful risk drift.
Does rebalancing always mean selling what went up?
No. First compare actual weights with your plan. New contributions can sometimes reduce the gap without an immediate sale.
Does a Swiss portfolio need global exposure?
That depends on your objectives and other assets. The important point is to understand your actual concentration across Switzerland, currencies and sectors.