Commentary
Rebalancing Is a Discipline, Not a Forecast
The fund rebalances across macroeconomic regimes. That phrase promises a lot. Here is what it means in practice, what triggers a change, and what we refuse to do in its name.
5 min readReiksgarde Capital
Our investment approach describes risk-adjusted growth through systematic rebalancing across macroeconomic regimes. Every word in that sentence was chosen, and each of them can be misread. Systematic can sound like a black box. Regimes can sound like forecasts. Rebalancing can sound like trading. This commentary sets out what the phrase commits us to, and what it does not.
The central claim is simple. A portfolio's exposure drifts on its own: what rises becomes a larger share of the whole, what falls becomes smaller, and after a strong year the fund is more concentrated in its winners than anyone decided it should be. Rebalancing is the act of restoring the intended shape. Done consistently, it sells what has become expensive relative to plan and buys what has become cheap, without anyone having to predict which is which.
The word regime adds one thing to that: the intended shape is not fixed forever. It depends on the broad economic environment, and there are a small number of environments that call for a different shape. Recognising which one we are in is the part that requires judgement, and it is the part we try hardest to keep from turning into forecasting.
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