Rebalancing is the process of reviewing and adjusting the holdings in a Model Portfolio according to its rules. Different types of Model Portfolios rebalance in different ways and at different frequencies.
Types of rebalancing in Stock Doctor Model Portfolios
AI Model Portfolios: Monthly rebalancing
AI Model Portfolios rebalance on a monthly schedule. At each rebalance date, the machine-learning model re-ranks all eligible stocks by expected return. The portfolio is then rebuilt based on the new rankings, subject to Financial Health screening and minimum liquidity requirements. Stocks that no longer rank highly enough are removed and replaced with higher-ranked alternatives.
The Latest Changes tab on each AI Model Portfolio page shows which stocks were added, removed or changed weight in the past 3 months.
Quant Model Portfolios: Event-driven rebalancing
Quant Model Portfolios are updated daily as company data changes. Rebalancing occurs when a stock enters or exits the eligible universe, for example, when a stock passes or fails Financial Health screening, or when its growth or value ranking changes enough to enter or exit the top 20.
- Equal Weight: When a stock is added or removed, all positions are rebalanced back to equal weighting.
- No Rebalancing: When a stock is added or removed, only the entering and exiting positions are adjusted. Existing holdings are not rebalanced.
See example of latest changes for equally weighted, Quant Growth & Value portfolio below: