Sharad Chand, Business Head – Wealth Management at Alankit Limited, added that rebalancing also helps reduce “volatility drag” by ensuring portfolios do not remain concentrated in overheated segments.
"Due to market reversion, buying an underperforming asset during volatility is bound to give good returns in the future. Through rebalancing by reducing equity during volatility you are reducing Volatility drag, which is minimising your losses by reducing the percentage to gain required, which leads to a smoother and higher- long term growth," he said.