Rebalancing is a risk control, not a return strategy

Every concentrated portfolio we have ever reviewed was constructed the same way: nobody decided to build it. Positions performed, weights drifted, and the book quietly became a bet on whatever had worked most recently.

Drift is a decision you did not make

If a sleeve compounds meaningfully faster than the rest of the book, its weight rises. Absent intervention, the portfolio's risk profile migrates toward whichever strategy is late in its cycle — the precise moment its forward return is lowest.

The mechanism is not subtle, but it is easy to rationalise. Nobody wants to trim the thing that is working. There is always a narrative available explaining why this time the run has further to go, and often that narrative is even correct.

Bands, not targets

We hold each strategy within a band rather than at a point. Real assets sit at 45% with a permitted range of 38–52%; private credit at 33% within 27–39%. Inside the band we do nothing. Outside it, we rebalance at the next quarterly review regardless of view.

The band matters more than the target. A hard target generates constant, costly trading around noise. A band absorbs ordinary movement and only forces action when drift becomes structural.

The purpose is not to improve returns. It is to ensure the portfolio we hold is the one we chose.

The listed sleeve does the work

Rebalancing private market exposure is slow and expensive; you cannot trim a warehouse by six per cent. This is the main reason we run a listed real assets sleeve at all. It is the liquid shock absorber that lets us adjust total exposure without forcing transactions in the private book.

It is a lower-returning allocation in isolation, and we hold it anyway. Its contribution shows up as the absence of forced selling in 2022 — which does not appear in any attribution report, but is the single most valuable thing it has done.