At Allio, we use a sophisticated rebalancing process to ensure your portfolio stays aligned with your investment strategy. Rebalancing helps manage risk, maintain asset allocations, and optimize performance over time. Learn more about rebounding here.
What is Rebalancing?
Rebalancing is the process of adjusting your portfolio's asset allocation to keep it in line with your investment goals. Market movements can cause certain assets to grow or shrink in proportion to your total portfolio, and rebalancing ensures that your investments remain properly weighted.
When Does Rebalancing Happen?
Allio’s system continuously monitors your portfolio and can trigger a rebalance under the following circumstances:
Drift Threshold Reached: If any asset class drifts beyond a predefined percentage from its target allocation, we adjust your holdings accordingly.
Scheduled Rebalancing: Periodic reviews ensure your portfolio remains optimized, even if no major market movements occur.
Cash Events: Deposits or withdrawals may necessitate buying or selling assets to maintain your portfolio's intended allocation.
How Rebalancing Works
Assessing Portfolio Needs: Our system determines whether assets need to be bought or sold based on allocation targets and available cash.
Executing Trades: Orders are placed to bring your portfolio back in balance. These trades aggregate efficiently to optimize execution.
Confirming and Updating: Once trades are executed, we update your portfolio to reflect the changes.
What Happens During a Withdrawal?
If you initiate a withdrawal, our system ensures that enough cash is available to meet your request. This may involve selling some positions while maintaining balance across your remaining investments.
What Happens if a Trade is Delayed?
While Allio’s trading system executes rebalancing quickly, external market conditions or processing times at our trade execution partners may occasionally introduce slight delays. If this happens, our system continuously monitors the situation and takes appropriate action to keep your portfolio aligned.
Keeping You Informed
We provide timely updates through the Allio app, ensuring you always have visibility into your portfolio’s status. You’ll receive notifications when a rebalance occurs, so you know how your investments are being managed.
Rebalancing Timing & Constraints
The 7-day automatic rebalance analysis resets after a client directed manual rebalance.
Rebalancing is scheduled at the start of the next trading window if the portfolio update occurs outside market hours.
Pattern Day Trading (PDT) checks prevent buying and selling the same asset within a day. If attempted, rebalancing is postponed to the next trading day at market open (9 a.m.).
Market & Account Restrictions
Market is closed – Rebalancing attempts while the market is closed are blocked.
Investment account cannot trade – If an account is restricted from trading (e.g., compliance reasons), rebalancing is not allowed.
Unfunded accounts – If an account lacks sufficient funds, rebalancing fails.
This structured approach ensures that client portfolios remain aligned with their investment goals while maintaining execution efficiency and compliance with trading rules.
Managed Portfolios Rebalancing
Scheduled Rebalances
Timing: The rebalancer runs daily at 2:30 PM ET to ensure trades are executed before the market closes at 4:00 PM ET.
Trade Execution: Orders are placed as market orders set to execute the same day (Good-til-Day orders). If an order isn’t filled before market close, it is canceled.
Rebalancing Process:
The system calculates the necessary trades based on portfolio drift from the target allocation.
It validates buying power, position limits, and trading restrictions.
Orders are sent to the market via our broker dealer
Trade confirmations are received
Handling Price Changes During Rebalance
Sell Orders: Executed based on the number of shares.
Buy Orders: Placed using a notional amount to simplify execution.
The system ensures sell orders are executed first before placing buy orders to prevent overspending.
Dynamic Macro Portfolios (DMP) Rebalancing
Instant & Scheduled Rebalances
Clients can trigger an instant rebalance at any time, in addition to the scheduled every 7 days 2:30 PM ET rebalance.
If an instant rebalance is blocked due to same-day trading restrictions (e.g., attempting to sell a stock that was bought earlier in the day), it is not rescheduled automatically.
Trade Execution & Handling Cross-Portfolio Trades
Unlike Managed Portfolios, DMPs are client-directed, meaning clients customize their allocations across macro asset classes, sectors, and individual securities.
If multiple portfolios are rebalancing and one needs to sell shares of a stock while another needs to buy, the system does not reconcile internally—each portfolio executes its trades independently.
This structured approach ensures that client portfolios remain aligned with their investment goals while maintaining execution efficiency and compliance with trading rules.
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