How Automated Investor rebalances your portfolio

  • The algorithm that is used by our robo-advisor weighs the costs and benefits of rebalancing and determines if transactions are needed to get you closer to your target asset allocation.

  • We allow some drift so we can capture returns and calculate whether the benefit of rebalancing makes sense based on your goals.

  • New dividends and contributions get invested in the asset classes that are furthest from their ideal allocations.

  • We rebalance your portfolio as needed based on market movements, this is known as “market-based rebalancing.”

 

The importance of rebalancing a portfolio

 

When you sign up for Automated Investor, we’ll ask you about your tolerance for risk and your financial goals. Then we’ll assign a model for your portfolio, made up of eight asset classes. Once the model is established, our robo-advisor can assess the need for rebalancing the investment allocations. 

Automated rebalancing is a key benefit of any robo-advisor or automated investing product, as it helps you maintain the appropriate portfolio risk for your financial goals. Here’s why:

  • Over time, your portfolio will change due to market movements. This is called “drift.”

  • Investment portfolio rebalancing restores your portfolio to its target asset allocation by selling some of your asset classes that have outperformed in the short-term and buying more of the asset classes that have underperformed in the short-term.

  • The goal of rebalancing is to reduce volatility in your portfolio. This helps to manage your risk.

  • The investment rebalancing tool will review your portfolio each trading day and adjust your portfolio as needed.

Example: Rebalancing makes a difference

  • A $100 portfolio has a target asset allocation of an 65/35 stock/bond split, or $65 in stocks and $35 in bonds. This is considered a balanced portfolio.

  • If throughout the year, stocks return 35% and bonds return 2%, stocks are now worth $87.75 (65 x 1.35) and make up 71% of your portfolio, while bonds are worth $35.70 (35 x 1.02) and make up 29%.

  • This investment portfolio is no longer in balance with its 65/35 target asset allocation. Because it has more stocks than it should, it's taking on higher risk.

The potential cost benefits of automated portfolio rebalancing

Automated Investor, with its automatic rebalancing feature, can additionally help you save in the following ways:

No transaction fees

Portfolio rebalancing is included as part of Automated Investor’s online investing service. You do not incur additional transaction fees as your portfolio is being rebalanced.

Tax-efficient placement

We consider capital gains when the assets are not in a tax-advantaged account. (Capital gains taxes may be due upon the sale if the asset sold has appreciated in value).

Time and effort

Automated Investor efficiently and automatically rebalances your portfolio, so you don’t have to pay additional management fees for each rebalance or spend time researching in order to rebalance your investments yourself.

Automated Investor from U.S. Bancorp Investments is exclusively for our customers. Log in to open an account or call 866-758-8655.

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Automated Investor legal agreements & disclosures

Investment and insurance products and services including annuities are:
Not a deposit • Not FDIC insured • May lose value • Not bank guaranteed • Not insured by any federal government agency.

U.S. Investments is a marketing logo for U.S. Bancorp Investments Inc.

Investment and insurance products and services including annuities are available through U.S. Bancorp Investments, the marketing name for U.S. Bancorp Investments, Inc., member FINRA and SIPC, an investment adviser and a brokerage subsidiary of U.S. Bancorp and affiliate of U.S. Bank.

Insurance products are available through various affiliated non-bank insurance agencies, which are U.S. Bancorp subsidiaries. Products may not be available in all states. CA Insurance License #0E24641.

U.S. Bancorp Investments and its representatives do not provide tax or legal advice. Your tax and financial situation is unique. You should consult your tax and/or legal advisor for advice and information concerning your particular situation.

IMPORTANT: The projections or other information generated by Automated Investor regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results may vary with each use and over time.

Investing involves risk, including possible loss of principal.

U.S. Bancorp Investments is registered with the Securities and Exchange Commission as both a broker-dealer and an investment adviser. To understand how brokerage and investment advisory services and fees differ, the Client Relationship Summary is available for review.

Pursuant to the Securities Exchange Act of 1934, U.S. Bancorp Investments must provide clients with certain financial information. The U.S. Bancorp Investments Statement of Financial Condition is available for you to review, print and download.

The Financial Industry Regulatory Authority (FINRA) Rule 2267 provides for BrokerCheck to allow investors to learn about the professional background, business practices, and conduct of FINRA member firms or their brokers. To request such information, contact FINRA toll-free at 1-800‐289‐9999 or via https://brokercheck.finra.org. An investor brochure describing BrokerCheck is also available through FINRA.

Past performance and market conditions do not guarantee future results. There is no assurance that a particular investment mix or hypothetical performance shown will lead to actual investment results or performance. Diversification and asset allocation strategies do not guarantee low volatility, profit or protection against loss. There is no guarantee that you will achieve your goal within your time horizon, or over a longer time period by using Automated Investor. You are responsible for providing accurate and up to date information about your goal, time horizon, and risk tolerance.

If you have any questions or concerns, contact us to consult with an investment professional 866-758-8655. The illustrative portfolios cannot account for the impact that economic, market, and other factors may have on an actual investment portfolio.

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