With the current volatility in the market, is now the time to rebalance my portfolio?

April 3, 2023


To start, if you have a well-designed portfolio strategy that is integrated with a long-term financial plan than the answer is simple, rebalance regularly. This approach not only can help manage overall risk, but also help take advantage of great opportunities.


‘Regularly’ can have a few meanings; for example, you could have an annual rebalance date, look at the portfolio when you are adding new money, rolling over fixed income maturities, making an alteration to an existing holding or when there are significant moves in the market. I am not saying that you need to make significant changes during high volatility times; but those times usually present great opportunities to those who can take advantage of them. When there are significant market moves (especially the downward ones) you are either making a mistake or benefitting from someone else’s. Why does having a well-designed portfolio and rebalancing make sense? It allows one to make unemotional adjustments to their investments that are often the exact opposite of the decision they would normally make.


Currently a lot of people putting new money to work in their RRSPs or TFSAs are wondering whether they should just buy a GIC versus adding it to this ‘crazy’ market. Of course, you should add to the asset class that is determined by your strategy, which could mean a combination or in the case where your Equities have declined, to them. This is called buying low. Alternatively, when the market is on fire and doing well, most people want to naturally add to the part of their portfolio that is performing well and not to some low yielding GICs or Bonds (think two years ago); however, they are missing the chance to sell at highs and taking on a higher degree of portfolio risk.


By having a disciplined rebalancing strategy, you are more apt to invest according to the tradition of ‘buying low and selling high’. So, if any doubt, relook at your portfolio and if it or certain components are well off their designated weightings, go ahead and rebalance.

The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of BMO Nesbitt Burns Inc. ("BMO NBI"). Every effort has been made to ensure that the contents have been compiled or derived from sources believed to be reliable and contain information and opinions that are accurate and complete. Information may be available to BMO NBI or its affiliates that is not reflected herein. However, neither the author nor BMO NBI makes any representation or warranty, express or implied, in respect thereof, takes any responsibility for any errors or omissions which may be contained herein or accepts any liability whatsoever for any loss arising from any use of or reliance on this report or its contents. This report is not to be construed as an offer to sell or a solicitation for or an offer to buy any securities. BMO NBI, its affiliates and/or their respective officers, directors or employees may from time to time acquire, hold or sell securities mentioned herein as principal or agent. BMO NBI -will buy from or sell to customers securities of issuers mentioned herein on a principal basis. BMO NBI, its affiliates, officers, directors or employees may have a long or short position in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon. BMO NBI or its affiliates may act as financial advisor and/or underwriter for the issuers mentioned herein and may receive remuneration for same. A significant lending relationship may exist between Bank of Montreal, or its affiliates, and certain of the issuers mentioned herein. BMO NBI is a wholly owned subsidiary of Bank of Montreal. Any U.S. person wishing to effect transactions in any security discussed herein should do so through BMO Nesbitt Burns Corp. Member-Canadian Investor Protection Fund.If you are already a client of BMO Nesbitt Burns, please contact your Investment Advisor for more information.