Connect with us


Phuket Business: Rebalancing your stock portfolio

Legacy Phuket Gazette



PHUKET: One thing you should do at least once each year as an investor, is re-balance your investment portfolio. I have come across many people who put together a good portfolio, but then, because of not re-balancing, have rode many of their best holdings up and back down.

Simultaneously, they are under-invested on holdings that have their best returns many years after the initial investment.

To understand why re-balancing is so important, consider a theoretical portfolio of just two funds.

Let’s call them Funds A and B, just to keep it simple.

Assume Fund A is more volatile and has historically averaged a 20% gain, and thus it was initially given a 40% allocation.

Now let’s assume Fund B has averaged a 10% gain and so was given 60% of the portfolio.

Now as averages are just that, the only thing we can be relatively certain of in the first year, is that neither of these funds will likely achieve their average.

One may be below and one might be above – or they could both be above.

If Fund A has a cracking first year and returns 30%, while Fund B has a horrible year and loses 10%, the initially allocation will be out of whack.

Again to keep it simple, let’s say the portfolio was initially 100,000 (pounds, baht, dollars, choose whichever currency you’d like to think in).

Fund A will now have risen from 40,000 to 52,000 while fund B has declined from 60,000 to 54,000 for a total portfolio value of 106,000. The weighting has now shifted to roughly 49% Fund A and 51% fund B, very different from the original targeted allocation.

To re-balance this, one simply need to multiply the original weight of each fund by the new total portfolio value of 106,000 to determine how much should now be in each.

The answer is that Fund A should have 42,400 and fund B should have 63,600.

Simply sell 9,600 out of Fund A and re-invest the proceeds into Fund B and the portfolio is now rebalanced.

Obviously this is counter-intuitive as most people would look at fund B and say, “Why should I add to that dog? Let’s move some out of that one and into Fund A because that one actually made me some money.”

Now, let’s assume that next year’s returns revert, and Fund A has a small losing year of 5% and Fund B makes an average return of 10%. If the fund had not been rebalanced, the new portfolio value would be 108,800. However with re-balancing, it could have gained an extra 1,440 and would now be worth 110,240. That’s an extra 1.3% over the one year.

Obviously there may be years where re-balancing costs you, but in the long term even if it adds .5% on average, that could compound to be a nice extra chunk of change.

Re-balancing also reduces the chances that you will be overexposed to the more
volatile funds you are holding.

David Mayes MBA lives in Phuket and provides wealth management services to expats around the globe, focusing on UK pension transfers. He can be reached at 085-335-8573 or

— David Mayes


Get more from The Thaiger

📱 Download our app on Android or iOS
👋 Have your say on our Thailand forums
🔔 Subscribe to our daily email newsletter
📺 Subscribe / Join YouTube for daily shows
👍 Like/Follow us on Facebook
🐦 FOLLOW us on Twitter
📷 FOLLOW us on Instagram


Join the conversation and have your say on Thailand news published on The Thaiger.

Thaiger Talk is our new Thaiger Community where you can join the discussion on everything happening in Thailand right now.

Please note that articles are not posted to the forum instantly and can take up to 20 min before being visible. Click for more information and the Thaiger Talk Guidelines.

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

Follow Thaiger by email:

News5 mins ago

Grenade attack kills ranger in Pattani

Pattaya9 mins ago

Reopening Pattaya: Will it happen next week or not?

Thailand59 mins ago

5 police kiosks set on fire in Bangkok, no injuries reported

Sponsored21 hours ago

HOMA is now offering fully-serviced, affordable lifestyle apartments in Phuket Town.

Welcome back to Thailand!

Thaiger is getting behind local businesses for the restart of tourism in Thailand - up to 50% discounts across all advertising packages!

Pattaya1 hour ago

Pattaya restaurant busted selling alcohol, 15 arrested

Thailand1 hour ago

Decision on Hua Hin Hospital “dual pricing” case set for next week

Thailand1 hour ago

Morning Top Stories | CCSA says Nov 1 Re-opening possible, Joe Ferrari update | September 23

Join the conversation on the Thaiger Talk forums today!
Thailand2 hours ago

Good Morning Thailand | Is E-sports a real sport? Covid Visas, Joe Ferrari | Ep. 95

Guides2 hours ago

Best VPN services to use in Thailand

Thailand2 hours ago

Lawyer and shaman duo demand police investigate Kanchanaburi temple rehab that allegedly tortured patients

360 Reviews2 hours ago

Top 8 bottled water in Thailand

Phuket2 hours ago

Phuket Covid-19: 1 new death, hospital occupancy rates fell

Guides2 hours ago

The best caves in Thailand to explore

Best of2 hours ago

5 must-try drinks when you visit Thailand

Thailand3 hours ago

Police seize assets believed to be acquired through drug trade, assets valued at nearly 59 million baht

Coronavirus Vaccines3 hours ago

Thailand to receive 120,000 doses of AstraZeneca from Singapore on Saturday

Morning Top Stories Thailand | Police to end protests, Human Trafficking | September 14 | Thaiger
Thailand1 week ago

Morning Top Stories Thailand | Police to end protests, Human Trafficking | September 14

Thailand7 months ago

Thailand News Today | Thai Airways in rehab, All go for Songkran | March 4

Tourism7 months ago

Phuket’s nightlife. Yes, bars and clubs are still open | VIDEO

Phuket7 months ago

Thailand News Today | Covid passport talks, Thai Airways heads to court | March 2

Tourism7 months ago

Phuket Thai food treats you need to try | VIDEO

Thailand7 months ago

Thailand News Today | Bars, pubs and restaurants ‘sort of’ back to normal | Feb 23

Tourism7 months ago

In search of Cat & Dog Cafés in Phuket Town | VIDEO

Thailand8 months ago

Thailand News Today | Gambling crackdown, Seafood market to reopen, Vlogger challenge | Jan 21

Thailand8 months ago

Thailand News Today | Covid testing for visas, Business impact, Vaccine approval | January 19

Thailand8 months ago

Thailand News Today | Weekend Bangkok bombs, Thailand fires, Covid update | January 18

Thailand8 months ago

Thailand News Today | Stray car on runway, Indonesian quake, 300 baht tourist fee | January 15

Thailand8 months ago

Thailand News Today | Governor off respirator, sex-trafficking arrest, condo prices falling | January 14

Thailand8 months ago

Thailand News Today | Chinese vaccine, Thailand ‘drug hub’, Covid update | January 13

Thailand8 months ago

Thailand News Today | Bangkok may ease restrictions, Phuket bar curfew, Vaccine roll out | January 12

Thailand8 months ago

Thailand News Today | Covid latest, Cockfights closed down, Bryde’s Whale beached | January 11