"I want an auto-rebalancing option to allow me to follow Larry Swedroe’s 5/25 rule. i.e. rebalance when the change in an asset class’s allocation is greater than either an absolute 5 or 25 percent of the original target allocation, whichever is less.
Example 1: VAS has a target allocation of 40% in a portfolio, but due to a rough period on the ASX, it’s allocation drops to 35%. You must buy more VAS to rebalance your portfolio back up to its 40% allocation.
Example 2: VAF has a target allocation of 10% in a portfolio, but it’s allocation rises to 12.5% of the portfolio. Because 12.5% is 25% more than the target allocation, you need to sell down VAF to bring it back to 10% and rebalance the portfolio.
You could give investors the option either to set it to follow Larry Swedroe’s 5/25 rule or just set a frequency where every holding in their portfolio is rebalanced (ie once a year, once every six months, etc.)
Not a huge issue, just something to think about that I’m sure many of your clients would appreciate because it completely removes the aversion to capital gains tax"
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