Portfolio rebalancing keeps your investments aligned with your target allocation as markets shift over time. This article explains what rebalancing is, how it works, and how Gusto Retirement handles it automatically.
A key part of setting up your Gusto 401(k) or Gusto IRA is selecting a portfolio that fits your goals, age, risk tolerance, and time horizon. Each portfolio — whether professionally managed or custom — has a specific mix of assets based on those preferences.
Over time, as investments rise and fall with the market, your asset balance may shift away from your original targets. Portfolio rebalancing accounts for this shift and brings your assets back in line with your target allocation and goals.
For example, if you selected Gusto Retirement’s Moderate portfolio, you would start with a mix of 65% stocks and 35% bonds. If stocks performed well during the year, your portfolio could shift to 75% stocks and 25% bonds — moving away from your intended balance.
Rebalancing is the process of selling shares of holdings that have grown beyond their target weight and using those funds to buy shares of holdings that are below their target weight. This helps maintain the balance of assets in your portfolio so they stay aligned with your chosen investment allocation.
When your Gusto Retirement portfolio assets no longer align with your selected preferences — whether you've chosen a managed or custom portfolio — your allocations are automatically rebalanced.
When rebalancing occurs, you'll see a notification in your Transaction History that says, “Account rebalancing: Funds reallocated to match your investment preferences.”
Important: The auto-rebalancing feature cannot be disabled.
If you're actively contributing, new contributions may be used to buy more of the holdings that are under-allocated in your portfolio. Shares may also be exchanged to help maintain your desired portfolio balance.
For more details on how Gusto Retirement handles portfolio rebalancing, review the Gusto Retirement Terms of Service in the Documents section of your dashboard.
Investment advisory services for Gusto’s 401(k) (when 3(38) fiduciary services are appointed) and SEP IRA/IRA products are offered by Gusto Investment Services, LLC, an SEC-registered investment adviser. References to “Gusto,” “we,” or “our” in this article specifically refer to Gusto Investment Services, LLC. For more information regarding fees and services, see Gusto’s ADV 2A Brochure and Form CRS.
This information is general in nature and is for informational purposes only. It should not be construed as investment advice. Investing involves risk and investments may lose value. Consult a qualified financial adviser.