My question relates to the part of my portfolio invested in passive funds. The portfolio currently look like this:
For those that are not familiar with all of the EPICs in the investment world
![Very Happy :D](./images/smilies/icon_e_biggrin.gif)
VWRL: Vanguard FTSE All-World
VVAL: Vanguard Global Value Factor
WOSC: SPDR World Small Cap
VFEM: Vanguard FTSE Emerging Markets
SEMS: iShares Emerging Markets Small Cap
IWDP: iShares EPRA/NAREIT Developed Markets Property Yield
SLXX: iShares Core GBP Corporate Bond
CRPS: iShares Global Corporate Bond
SEMB: iShares Emerging Markets Bond
UTIP: SPDR US TIPS
The spread of assets has been selected using the asset allocation suggestions of Tim Hale.
Now, I would like to re-balance the portfolio on an annual basis and I get the idea of capturing the growth from those assets that have grown in value to an extent that their value as a percentage of the portfolio is higher than the target allocation. This 'excess' would be re-distributed amongst the assets that have fallen below their target in the asset mix and are 'cheaper' when assessing against the portfolio value as a whole. As an example, if VWRL's value was at 40% rather than the target of 36%, I would sell 4% of VWRL and re-distribute to the corresponding asset(s) that have fallen 4% behind.
After this waffle, the question - if I were to add 4% of the portfolio overall value in 'new' money to the assets that have fallen behind (from bank account savings or by re-investing dividends generated from my HYP), rather than selling the outperforming asset (as in in the above example with VWRL) is the result the same? I don't mean to appear thick, but is it better (horrible word, I know) to capture growth and re-distribute, or 'run the winners' and top-up from outside sources.
It may be that I'm over-thinking matters and it doesn't really matter what option I choose as long as the asset allocation is maintained.
Any suggestions are very welcome.
Cheers, OLTB.