How to Rebalance Your Portfolio in Minutes with My Portfolio Tool

As a financial advisor, keeping your clients’ portfolios aligned with their risk tolerance is critical—and it doesn’t have to take hours. With our Free Portfolio Rebalancing Tool, a free resource for advisors, you can upload portfolio data, visualize allocations, and rebalance in minutes. Rebalancing shouldn’t be a daunting task that gets put off for years. Experts from Vanguard recommend rebalancing each account at least once per year to realign it with the client’s goals. (1) Whether you’ve been behind on rebalancing or are simply looking for a more efficient solution during annual reviews, My Portfolio Tool can help. Here’s how:

Step 1: Upload Your Portfolio Data

To get started with My Portfolio Tool, you need to input your current portfolio holdings. There are two ways to do this:

• Manual Entry: You can add each holding individually by providing details such as description, symbol, asset class, and market value. This method is ideal for smaller portfolios or when you want to ensure every detail is accurate.
• CSV Upload: For larger portfolios, uploading a CSV file is more efficient. Your CSV should include columns like "Description / Fund, Symbol / CUSIP / ID, Asset Class, and Market Value." Ensure your file is formatted correctly to avoid errors—DO NOT INCLUDE CURRENCY SYMBOLS ($), use commas to separate values, enclose text fields in quotes if they contain commas, and save the file with a .csv extension. For detailed instructions and a sample CSV template, visit our "Uploading Your Portfolio Data" page.

Once you’ve prepared your data, go to the My Portfolio Tool main page and select your preferred method of uploading. After submitting your data, the tool will process it and display your current allocations in charts and graphs, giving you a clear overview of your portfolio’s composition.

Tip: Before uploading, double-check your CSV for any errors, such as missing values or incorrect formats, to prevent data misinterpretation. A sample interface would show the upload section with a CSV file selected, highlighting the ease of data input.

Step 2: Select Your Goal Model Number

Before diving into adjustments, select the model number that best matches your client’s investment goals and risk tolerance. My Portfolio Tool offers five predefined models, ranging from conservative to aggressive:

Each model has specific percentage allocations for asset classes like cash, bonds, large value, large blend, large growth, small/mid value, small/mid blend, small/mid growth, aggressive, miscellaneous, and international. Select the model that aligns with your client’s objectives to set the target allocations for rebalancing.

Step 3: Customize Your Target Allocations

While the predefined models provide a solid starting point, My Portfolio Tool allows you to customize these allocations to better align with your specific investment goals. You can adjust the percentages for each asset class as needed. For example, if Model 3 suggests 35% in bonds but your client prefers a slightly higher bond allocation, you can modify it accordingly. These customizations are saved in your browser, so you don’t have to re-enter them unless you clear your cookies.

Important Note: The predefined allocations in the model numbers are not investment recommendations. They are provided as starting points, and you should use your own discretion when setting target allocations for your clients’ portfolios.

Step 4: Visualize Your Allocations

With your portfolio data uploaded and your goal model selected, My Portfolio Tool generates a comprehensive bar chart that compares your current allocations to your target allocations. Each bar represents an asset class (e.g., large value, bonds, international), with its height indicating the percentage of your portfolio currently allocated to that class. The chart includes markers or shaded areas showing the target range for each asset class based on your selected model.

For example, if your target allocation for bonds is 20% but your current allocation is 25%, the bond bar will extend beyond the target range, indicating an over-allocation. Conversely, if your current bond allocation is 15%, it will fall short, showing an under-allocation. By hovering over each bar, you can see detailed information, including which of your individual holdings contributes to that asset class. This feature helps you understand the composition of each category and identify specific holdings that may be causing imbalances.

A sample visualization would show a bar chart with annotations highlighting over- and under-allocated areas, making it easy to spot where adjustments are needed.

Step 5: Refine Holding Categorizations

My Portfolio Tool uses a sophisticated algorithm to automatically categorize your holdings into appropriate asset classes based on their characteristics and historical data. However, due to the vast number of possible holdings and the evolving nature of financial products, some categorizations might not be accurate. For example:

• A structured product might be mistakenly classified as a bond when it behaves more like an equity.
• A mutual fund that has shifted its investment strategy might no longer fit its original category.
• Some holdings, especially alternative investments or less common funds, might be placed in the "Misc" category because the tool doesn’t have enough information to classify them precisely.

To ensure your portfolio analysis is accurate, review the categorizations provided by the tool. If you notice any discrepancies, you can manually adjust the asset class for those holdings. For instance, if a holding is incorrectly categorized as "Misc," assign it to the most appropriate asset class based on your knowledge of its investment characteristics. This step ensures a precise picture of your portfolio’s true allocation, which is crucial for effective rebalancing.

Step 6: Simulate Cash Flows

If there is new cash coming into the account or if there will be a distribution, you can simulate these changes in My Portfolio Tool. Use the "Net Cash Adjustment" box to add or subtract cash from the portfolio. For example:

• If you’re adding $15,000 to the account, enter 15000.
• If you’re distributing $20,000, enter -20000.

This feature helps you see how these cash flows affect your overall allocations before making any actual trades, ensuring your rebalancing strategy accounts for these changes.

Step 7: Rebalance with Data-Driven Insights

With your current allocations visualized, categorizations refined, and cash flows simulated, you’re ready to rebalance your portfolio. My Portfolio Tool provides clear, data-driven insights in the "Excess/Shortage" section, showing exactly how much you need to add or subtract from each asset class to align with your target allocations. These amounts are displayed in dollar terms, with red and green indicators on the bar chart showing over- and under-allocations, respectively.

For example:

• If you’re over-allocated in bonds by $2,000, the tool will show -2000 next to bonds.
• If you’re under-allocated in small/mid growth by $1,500, it will show +1500 next to small/mid growth.

To simulate rebalancing, use the "+/-" column in the fund table:

• To reduce an over-allocated holding, enter a negative number (e.g., -1000) to simulate selling $1,000 worth of that holding.
• To increase an under-allocated holding, enter a positive number (e.g., +500) to simulate buying $500 worth of that holding.

You can also use the "Add Holding" feature to introduce new investments that help fill shortages in certain asset classes. As you make these adjustments, the charts and excess/shortage figures update dynamically, allowing you to see the impact in real-time.

Once satisfied with the simulated rebalancing, you can execute these trades in your actual portfolio, confident in your informed adjustments.

Why It Matters

Regular rebalancing is essential to keep your clients’ portfolios aligned with their investment goals and risk tolerance. With My Portfolio Tool, you can perform this critical task quickly and accurately, saving time without sacrificing precision.

Try My Portfolio Tool today at MyPortfolioTool and experience how easy and efficient portfolio rebalancing can be. We value your Feedback, so please let us know how we can improve the tool to better serve your needs.

Citations

1. Vanguard: Rebalancing Your Portfolio