Before You Start
- Basic understanding of ETFs, asset allocation, and portfolio theory
- Existing all-weather portfolio (e.g., Ray Dalio-inspired, diversified across stocks, bonds, gold, and commodities)
- Access to a European brokerage account (e.g., DEGIRO, Trade Republic)
- Recent portfolio statement or export (CSV/XLSX) for calculations
- Awareness of your country’s capital gains tax rules
Time needed: 45–90 minutes (analysis + execution)
What you'll need: Calculator or spreadsheet, broker app/website login, and optionally a rebalancing tool (e.g., Portfolio Performance, JustETF)
Rebalancing is the disciplined process of realigning your portfolio to its original asset mix. For all-weather portfolios—designed to weather any economic climate—rebalancing is crucial to maintain diversification and risk management. In this guide, you’ll learn exactly how to rebalance an all-weather portfolio as a European investor, with practical EUR-based examples, broker-specific steps, and tips to avoid costly mistakes.
What is an All-Weather Portfolio?
The all-weather portfolio, popularised by Ray Dalio, typically allocates assets across equities, bonds, commodities, and gold. A classic example for European investors might look like:
- 30% Global Equities (e.g., iShares Core MSCI World UCITS ETF (EUNL))
- 40% Bonds (e.g., Xtrackers II Eurozone Government Bond UCITS ETF (DBXZ))
- 15% Commodities (e.g., iShares Diversified Commodity Swap UCITS ETF (ICOM))
- 15% Gold (e.g., Invesco Physical Gold ETC (SGLD))
Over time, market movements cause these weights to drift—potentially increasing risk or reducing returns. Rebalancing brings your allocation back to target.
Step 1: Export and Review Your Portfolio
What to do: Download your latest portfolio statement or export your holdings to a spreadsheet.
- In DEGIRO: Go to Account → Portfolio → Export and download as CSV.
- In Trade Republic: Go to Profile → Documents → Annual Statement or check the “Investments” tab for a summary.
Why it matters: You need up-to-date position sizes and values to calculate your actual allocation and compare it to your targets.
What can go wrong: Using outdated data can lead to incorrect trades; ensure you use the most recent figures.
Expected outcome: You now have a list of each ETF/ETC, the number of units held, and their current EUR value.
Step 2: Calculate Your Current Allocation
What to do: For each asset, calculate its share of your total portfolio value.
- Sum the current market value of all holdings (e.g., €35,000 total).
- For each asset, divide its value by the total portfolio value to get its percentage.
Example:
- iShares Core MSCI World (EUNL): €10,500 → 30%
- Xtrackers II Eurozone Gov. Bond (DBXZ): €14,000 → 40%
- iShares Diversified Commodity (ICOM): €5,250 → 15%
- Invesco Physical Gold (SGLD): €5,250 → 15%
Why it matters: This reveals your current asset allocation and highlights any drift from your target percentages.
What can go wrong: Forgetting to include cash or uninvested balances can distort your calculations.
Expected outcome: You have a table or spreadsheet showing both the EUR value and percentage for each asset class.
Step 3: Compare to Your Target Allocation
What to do: Compare each asset’s current percentage to your target. Note where you’re overweight or underweight.
Example Table:
| Asset | Current % | Target % | Difference |
|---|---|---|---|
| Equities (EUNL) | 34% | 30% | +4% |
| Bonds (DBXZ) | 38% | 40% | -2% |
| Commodities (ICOM) | 14% | 15% | -1% |
| Gold (SGLD) | 14% | 15% | -1% |
Why it matters: This step tells you exactly which assets to buy or sell to rebalance.
What can go wrong: Mixing up your targets, or failing to account for all positions (including fractional shares or new deposits).
Expected outcome: A clear list of which ETFs need to be topped up or trimmed.
Step 4: Decide on Rebalancing Frequency
What to do: Choose how often to rebalance. For most European retail investors, annual or semiannual rebalancing is optimal.
- Annual: Lower transaction costs, less time-consuming, suitable for taxable accounts.
- Semiannual: Keeps allocations closer to target, but may incur more trading and tax events.
Pro Tip:
Pro Tip
If you’re using a broker with free ETF trades (e.g., DEGIRO’s core selection), semiannual rebalancing may be cost-effective.
Why it matters: Over-frequent rebalancing can increase costs and trigger unnecessary taxes; too infrequent can let risk drift.
What can go wrong: Rebalancing after every market move is inefficient and can reduce returns.
Expected outcome: You’ve chosen a calendar date (e.g., every January and July) for your rebalancing routine.
Step 5: Calculate Buy/Sell Amounts
What to do: For each asset, calculate the amount (in EUR) to buy or sell to return to target allocation.
- Multiply your total portfolio value by the target percentage for each asset.
- Subtract the current value of each holding from its target value.
Example (Portfolio Value: €35,000):
- Target for Equities: 30% × €35,000 = €10,500 (current: €11,900 → sell €1,400)
- Target for Bonds: 40% × €35,000 = €14,000 (current: €13,300 → buy €700)
- Target for Commodities: 15% × €35,000 = €5,250 (current: €4,900 → buy €350)
- Target for Gold: 15% × €35,000 = €5,250 (current: €4,900 → buy €350)
Why it matters: This quantifies your trades, minimizing guesswork and emotional decisions.
What can go wrong: Rounding errors or forgetting to account for transaction fees and minimum order sizes.
Expected outcome: A precise list of amounts to buy or sell for each ETF/ETC.
Step 6: Execute Trades on Your Broker
What to do: Place your buy/sell orders according to your calculations.
- In DEGIRO: Go to Portfolio → Select ETF → Buy/Sell, enter the amount, and confirm. Use DEGIRO’s official help center for order types and instructions.
- In Trade Republic: Tap Portfolio → Select ETF → Trade → Buy/Sell, enter amount, and confirm. See Trade Republic’s support for step-by-step guides.
Pro Tip:
Pro Tip
To minimize costs, use limit orders and avoid trading during periods of high volatility or outside main market hours.
Why it matters: Correct execution ensures your portfolio is realigned as intended.
What can go wrong: Accidentally trading the wrong ETF, using market orders in illiquid products, or failing to confirm transactions.
Expected outcome: You should see updated positions in your portfolio, matching your new target allocations within a small margin.
Step 7: Consider Tax Implications
What to do: Review the tax consequences of your rebalancing trades, especially in taxable accounts.
- In most European countries, selling ETFs may trigger capital gains tax.
- Some countries offer tax-free wrappers (e.g., PEA in France, ISA in the UK, PIR in Italy).
- Check if you can use losses to offset gains (tax-loss harvesting).
Why it matters: Taxes can erode your returns if not managed. Avoid unnecessary sales in taxable accounts when possible.
What can go wrong: Unexpected tax bills, or missing reporting deadlines.
Expected outcome: You have a record of all trades and understand the potential tax impact for your next declaration.
Step 8: Automate Where Possible
What to do: Set up automation tools to make future rebalancing easier.
- Use ETFs savings plans in Trade Republic: Go to Portfolio → Savings Plan → Select ETF → Set Amount and Frequency.
- On DEGIRO, use the “Recurring Order” feature (where available) to automate regular investments.
- Track your allocation drift with portfolio trackers like JustETF (official site) or Portfolio Performance (official site).
Pro Tip:
Pro Tip
Automating new contributions into underweight assets can reduce the need for selling and minimize taxable events.
Why it matters: Automation helps you stay disciplined and reduces the risk of emotional or delayed actions.
What can go wrong: Failing to update automation when your targets or circumstances change.
Expected outcome: Your future deposits will be aligned with your target allocation, keeping your portfolio balanced with minimal effort.
Common Mistakes When Rebalancing an All-Weather Portfolio
- Ignoring taxes: Selling ETFs in taxable accounts can trigger capital gains unexpectedly.
- Overtrading: Rebalancing too often increases costs and taxes without significant benefit.
- Neglecting fees: Small transaction fees add up, especially on low-cost brokers with minimum charges.
- Forgetting cash balances: Uninvested cash can throw off your allocation calculations.
- Using market orders for illiquid ETFs: This can lead to poor execution prices.
- Not updating your plan: Your target allocation should reflect your risk tolerance and goals as they evolve.
Next Steps
- Set a reminder in your calendar for your next annual or semiannual rebalance date.
- Document your process and trade rationale for future reference.
- Consider reading our broader step-by-step ETF rebalancing guide for more context and advanced tips.
- Regularly review your broker’s fee schedule and tax rules to stay up to date.
Disclaimer: This article is for educational purposes only and does not constitute financial advice. Always do your own research and consider consulting a qualified financial advisor before making investment decisions.
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