Rebalancing bands: set a minimum and maximum for each asset class
A rebalancing band is the range you allow an asset class to drift through before it counts as outside your rule: a minimum and a maximum share of the portfolio.
What a band is
Each asset class gets two limits, both as a share of the whole portfolio: the lowest share you accept and the highest. While the class stays between them, your rule is met. When it crosses one, the class is below its minimum or above its maximum.
A target is optional. If you keep one, it sits between the two limits. Prices move a class with no trade at all, so a band tells you when that drift has gone as far as you said you would allow.
Absolute and relative bands
A band can be drawn two ways. Allocait stores either one as a minimum and a maximum, so you work out the two limits and enter them.
- Absolute: a fixed number of percentage points on each side of a target. Every class gets the same distance, which is a larger part of a small class.
- Relative: a fixed fraction of the target itself. A large class gets more room in points, and a small class gets less.
Calendar and threshold checks
A calendar check looks at the portfolio on a schedule, such as the start of each quarter, and acts on whatever sits outside its band. A threshold check acts when a band is crossed, whatever the date.
A calendar check is simple, and a class can stay outside its band between looks. A threshold check reacts sooner and needs someone or something watching the numbers. You can combine them: look on a schedule, and act on a class only when it is outside.
Allocait states where each class stands whenever you or your agent check, and leaves the schedule to you.
How to write a band as your own rule
Write each band down while the market is quiet, so a later check is against a rule you already set. Every number is yours to choose.
- Name the asset class, such as equities, fixed income or cash.
- Write the lowest share of the portfolio you accept for it: the minimum.
- Write the highest share you accept: the maximum.
- Add a target between them if you keep one.
- For one holding, write its own size range: the lowest and highest share of the whole portfolio it may take.
- Note what you will do when a limit is crossed.
Worked example
A fictional portfolio, with a band for each asset class and a size range for each position in Equities. Every share is a percent of the whole portfolio.
Asset classes
| Class | Range | Share now | Check |
|---|---|---|---|
| Equities | 41% to 59% | 63% | Above max |
| Fixed Income | 21% to 37% | 27% | In range |
| Commodities | 3% to 11% | 7% | In range |
| Cash | 5% to 17% | 3% | Below min |
Positions in Equities
| Position | Range | Share now | Check |
|---|---|---|---|
| ALFA | 7% to 33% | 37% | Above max |
| BRAV | 7% to 33% | 17% | In range |
| CHAR | 7% to 33% | 9% | In range |
- Equities is 4 points above its band maximum.
- Cash is 2 points below its band minimum.
- ALFA is 4 points above its size maximum.
Illustrative example. The figures are hypothetical, not a recommendation.
Where Allocait fits
Allocait lets you set a minimum and maximum for each asset class and each position, and checks holdings against them.
It reports each class and position as in range, below its minimum or above its maximum, and shows the share change that would bring a class back inside its band. You can keep more than one rule set for a portfolio, and connect an AI agent to read and check them.
Allocait places no trade and connects to no brokerage. You decide what to do with each result.
- Size one position from a stop: the free calculator runs in your browser.
- Write your bands as a file: a template with every number blank.
- Add a pre-trade check to an agent: ask your rules before an order is placed.
Questions
Set your bands once. See where each class stands.
Allocait checks every class and position against the ranges you set, in the app or through your AI agent.
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