# Rebalancing

> See how a 60/40 portfolio drifted to 78% stocks in nine years without rebalancing, and what that did to risk, using real ETF benchmark data.

Data as of Oct 30, 2026. Rebuilt every trading night.

## Rebalancing: why your mix drifts and when to reset it

Data as of Oct 30, 2026. Rebuilt every trading night.

A 60/40 mix of ETFIQ's stock and bond benchmarks left alone from Dec 30, 2016 drifted to 78.0% stocks by Dec 31, 2025 , hypothetically.

Build a Simple Portfolio · Lesson 6 of 6 1 2 3 4 5 6

Set an amount. See how much of it sits in stocks and in bonds after nine years left alone. Amount (hypothetical) $10,000 Stocks (left alone) $7,801 Bonds $2,199 Of $10,000: Stocks (left alone) $7,801, Bonds $2,199. Hypothetical: $10,000 split 60/40 on Dec 30, 2016 and never traded, benchmark returns on past prices. Traded back to 60/40 each month it stays 60/40.

### The question

I picked a mix, say 60% stocks and 40% bonds. If I never touch it, does it stay that way?

### The idea

- No. Each part grows at its own speed, so the weights move. When stocks rise faster than bonds, stocks become a bigger share of your money. That is drift .

- Rebalancing means trading back to your chosen weights: moving money out of what grew most and into what grew least. Its main job is to keep your risk where you chose it , not to raise your return.

### Worked example

ETFIQ's benchmarks ( lesson 1 ) include Strategic 60, 60% stocks and 40% bonds traded back to those weights every month, and Strategic 80, at 80% stocks.

Start with $10,000 on Dec 30, 2016 : $6,000 in ETFIQ's Global Stocks benchmark (all in VT, a world stock fund) and $4,000 in its US Bonds benchmark (BND and AGG). Never trade. Each year, each part grows by its own calendar-year return. Benchmark returns are hypothetical: today's rules applied to past prices.

Year one, step by step. In 2017 stocks returned 24.49% and bonds 3.56% .

- Stocks: $6,000 × 1.2449 = $7,469

- Bonds: $4,000 × 1.0356 = $4,142

- Total: $11,612 . Stock share: $7,469 ÷ $11,612 = 64.3%

One good year for stocks moved the mix 4 points. Carry on the same way:

| End of | Never traded: stock share | Never traded: value | Strategic 60 (rebalanced): value |
| --- | --- | --- | --- |
| 2017 | 64.3% | $11,612 | $11,571 |
| 2019 | 65.5% | $13,048 | $13,035 |
| 2021 | 71.3% | $16,543 | $16,299 |
| 2023 | 73.0% | $16,161 | $15,821 |
| 2025 | 78.0% | $21,562 | $20,268 |

By the end of 2025, the "60/40" portfolio was 78% stocks . Nobody chose that; it happened.

Did leaving it alone pay? Here, yes : $21,562 − $20,268 = $1,294 more , because stocks beat bonds in most of these years and the drifted mix held more of them.

What it cost in risk. A 78% stock mix behaves much like Strategic 80. Over the ten years to Oct 30, 2026 , Strategic 80's worst fall was −28.15% , against −22.31% for Strategic 60. On $20,000, about where both portfolios ended: $20,000 × 28.15% = $5,630 lost, against $20,000 × 22.31% = $4,462 . The drifted portfolio carried the risk of a mix its owner never picked.

### The common mistake

"Rebalancing is a way to earn more." Sometimes it does, often it doesn't. In this decade, leaving the mix alone ended $1,294 ahead , because stocks mostly won. Rebalancing's reliable effect is on risk: it keeps the mix you chose, so your worst year looks like the one you planned for.

A second mistake: rebalancing so often that trading costs and taxes eat into returns. Selling in a taxable account can create a tax bill, so your calendar or band has a cost too.

### Check your understanding

Pick an answer to see why. Two of three right passes the lesson.

1. You start at 50% stocks and 50% bonds. Over a year stocks rise 20% and bonds 0%. What is your stock share now, before rebalancing? A 50% B About 55% C 60% D 70% Answer: B. About 55%. $5,000 × 1.20 = $6,000 in stocks; $6,000 ÷ $11,000 = 54.5%. Not C: stocks grew 20%, but the share rises less because the total grew too. 2. What is rebalancing's main job? A To guarantee a higher return B To keep your risk at the level you chose C To avoid all losses D To lower fees Answer: B. To keep your risk at the level you chose. It holds your weights, so your swings match your plan. Not A: in this lesson's decade, leaving the mix alone ended with more money. 3. A portfolio built at 60% stocks has drifted to 78% . Going by the benchmarks, how does its likely worst fall compare with the original plan? A About the same B Smaller C Deeper, closer to an 80% stock mix's D It can't be estimated Answer: C. Deeper, closer to an 80% stock mix's. Strategic 80 fell 28.15% at its worst, against 22.31% for Strategic 60. Not A: more stocks means deeper falls, as lesson 1 showed.

### Takeaways

- Check your stock share at least once a year; it drifts toward whatever grew fastest.

- Rebalancing keeps the risk you chose; it is not a return booster.

- Pick a rule, a calendar or a band, and write it down before markets move.

### Do it on ETFIQ

Load your own mix and see its stock share today

### Where to next

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Source: ETFIQ, independent ETF data. Recomputed nightly from public filings and prices.
Cite: ETFIQ, Rebalancing: why your mix drifts and when to reset it, data as of Oct 30, 2026. https://etfiq.com/academy/build-a-simple-portfolio/rebalancing/
Licence: https://etfiq.com/license/ Data ETFIQ computes is free to use with attribution: ETFIQ (etfiq.com). Issuer data stays under its owner's terms.
HTML: https://etfiq.com/academy/build-a-simple-portfolio/rebalancing/