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Financial Advisors Urge Portfolio Rebalancing Amid Market Volatility
cnbc · 2026-09-09
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With stocks near record highs and bonds facing a sell-off, experts recommend rebalancing portfolios to maintain target risk levels and lock in recent gains.
What Happened
Strategic Portfolio Realignment: Financial experts are advising investors to rebalance their portfolios as stock market gains have pushed many asset allocations beyond their original risk targets. By shifting profits from equities into bonds, investors can effectively return to their desired 60/40 split and mitigate potential downside risk.
Bond Market Pressures: Global government bonds have experienced a significant sell-off, with yields on 10-year U.S. Treasurys reaching multiyear highs due to inflation concerns and rising debt. This environment has caused funds like the iShares 7-10 Year Treasury Bond ETF (IEF) to decline, creating a potential buying opportunity for those looking to increase their fixed-income exposure at a discount.
Disciplined Investment Behavior: Rebalancing serves as a systematic approach to buying low and selling high, helping investors avoid the emotional pitfalls of market timing. Advisors emphasize that this process is not a "fire sale" but a necessary adjustment to ensure that portfolios remain aligned with an individual's long-term risk tolerance and retirement goals.
Tax and Execution Considerations: While rebalancing is essential for risk management, investors must be mindful of the tax implications associated with selling assets in taxable brokerage accounts. Experts suggest using new cash flows or gradual, tax-aware trades to reach target allocations without triggering unnecessary capital gains liabilities.