Optimal Rebalancing Strategy for Client Portfolios

David is a financial advisor with a diverse client base. He is helping his clients develop personalized investment portfolios. David uses a rebalancing strategy that revolves around two key principles: maintaining target asset allocations and managing transaction costs.

He encounters several scenarios where the market conditions significantly affect asset prices, which may lead to deviations from the target allocations. David wishes to determine the most effective rebalancing strategy for one of his high-net-worth clients, whose portfolio consists of various asset classes, including equities, fixed income, and alternatives.

Which rebalancing strategy should David choose to optimize the client’s investment outcomes while managing trading costs effectively?