What is rebalancing? Why target and actual weights differ

Rebalancing adjusts current holdings toward a specified target allocation. Choosing target weights, creating orders and changing holdings through execution are separate steps with separate records.

A target weight is a plan; a current weight is an observed state. Price changes, deposits, withdrawals, costs and unfilled orders can keep the two apart.

In this fictional teaching example, EX-A and EX-B each start at 500,000 yen, with no cash. If A grows to 600,000 while B remains 500,000, A represents 54.55% of the 1,100,000 total and B 45.45%. Current weights drift even though the 50/50 target is unchanged.

Ignoring fees and further price changes, bringing each holding to 550,000 would reduce A by 50,000 and increase B by 50,000. This is allocation arithmetic, not an executable quantity calculation or recommended allocation.

A calendar schedule, such as a monthly review, differs from a rule triggered by allocation drift. Record review dates, reference prices and order rules beforehand so later changes can be identified.

More frequent adjustment does not necessarily improve results. It changes traded amounts and costs, while prices continue moving between adjustments. Frequency alone cannot explain every difference in outcomes.

If quantities are fixed using an earlier close and opening prices rise, a purchase requires more cash. A sale failing to execute also changes the cash available for purchases.

KabuForge’s public course includes a path that skips an entire unaffordable order instead of resizing it. To explain a missed target, inspect sale and purchase processing order, fills, skip reasons and cash.

Read values before adjustment, targets, planned quantities, filled quantities, fees and values afterward separately. A target that was not reached remains part of the result; a planned schedule cannot replace actual holdings. Related explanations: transaction costs, maximum drawdown, backtesting.

The course’s monthly setting is a teaching example. This article does not select a superior frequency. Explain the outcome using the holdings and cash actually recorded in the report.

Workflow and display claims refer to KabuForge’s public GUI research course, reviewed October 6, 2026. See also Investor.gov’s rebalancing definition for the general definition. The fictional examples illustrate calculations and are not results from the public course.

The public examples are research-only, and historical information availability is unverified. Explaining a general concept does not establish that every part is implemented by the software. This article recommends no securities, trades or settings. Read the disclaimer.

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