Rebalancing restores an investment portfolio to its original target allocations. As prices of securities change over time, a user’s initial target allocations will drift. This may result in a portfolio that no longer aligns with your risk profile or investing style. Rebalancing allows you to reallocate funds to keep your portfolio in line with your accepted risk tolerance and financial goals.
Please keep in mind that any time you rebalance your portfolio you will generally be initiating a series of buy and sell transactions. Usually every sale of a security has a tax effect which may be a gain or a loss.