Rebalancing Based on Asset Performance

Michael is a portfolio manager responsible for overseeing a diversified investment portfolio for a high-net-worth client. He regularly monitors the portfolio to ensure it stays aligned with the client's investment objectives and risk tolerance. During his quarterly review, he notices that the allocation to equities has increased significantly due to strong market performance.

Michael is considering how best to rebalance the portfolio to maintain the target asset allocation while minimizing the impact of trading costs. He wants to ensure any adjustments will adhere to the client's risk profile and investment goals.