Rebalancing

[PWatson]

Hello folks,

I'm still a new, learning user, but I found a way to rebalance a portfolio and thought I'd share and see if others had a better approach. I have the following portfolio tiers,
...Client Master List
...........Client Master Portfolio
...............Client 529's
...............Client Investments
...................Client Sub-Portfolio A
...................Client Sub-Portfolio B
...................Client Sub-Portfolio C, etc.

I ran rebalance, asset allocation and goal allocation reports for the Client Investments level. ( I use the goal tab to label the large pieces, lg cap, md cp, sm cap, etc., while I break the asset type type into more detailed Morningstar slices. This gives me an overview and a detailed view.)

Once I had the reports, I created another sub-portfolio, at the lowest tier, to manually enter my portfolio changes, labeled them as needed, using the description area to indicate which actual sub-portfolio held that particular investment. I monitored the report to see the effect of the changes as I made them. I did this until I had the balance I was looking for.

After I got what I wanted, I moved the newly created "dummy" sub-portfolio up a level, on the same level as the 529's. There, it no longer combined with the other subs for reporting, and the reports go back to their original state. I can easily move it back in place at any time.

As a newby, I got excited thinking about this tonight. Are others using similar, or better methods?

Thanks,

Phil

[Mark]

Hi Phil,

Glad you found a solution that works for you. It seems fine to me, but I didn't really follow what criteria you wanted to use in rebalancing your accounts? Are you trying to rebalance to both investment goal and asset type categories at the same time?

[PWatson]

Mark,

Sorry, that was somewhat irrelevant to the hierarchy post. However, my use of the goal allocation labels could be thought of as "type" and the asset type labels as "sub-type," again allowing me to see an overview allocation, i.e. stocks/bonds/cash. The detailed "sub-type" breaks the pieces up into size/style/type/durations, etc.

I rebalance to the detailed view.

Phil

[Mark]

Hi Phil,

I see... Sounds like a fine re-balancing approach to me.

[PWatson]

Mark,

...and for further clarification of my original post, the 529's were part of this clients' financial life and can and should be tracked. However, I do not want to have them included as part of the clients investment portfolio, effecting the allocation. That's why it's up 1 level. I will also plan to keep all other non-investment portfolio assets up 1 level. Reporting from the highest level parent will provide a total net worth. Keeping the investment portfolio 2-3 tiers out lets me review, report and rebalance it exclusive of the other assets.

Phil