Rebalancing Strategies for a Client Portfolio

As an investment advisor, you are managing a portfolio for a client who has a long-term investment horizon and a risk tolerance that allows for moderate volatility. The client's portfolio currently consists of 60% equities, 30% fixed income, and 10% alternative investments, benchmarked against a strategic asset allocation of 65% equities, 25% fixed income, and 10% alternatives.

Given the recent market fluctuations, the equity component has increased to 70% of the portfolio, while the fixed income component has decreased to 25%. The client is interested in understanding the significance of rebalancing and the potential strategies you would recommend to realign the portfolio with its target allocation.

Discuss the various rebalancing strategies you could implement, their advantages and disadvantages, and provide a recommendation based on the client's situation and objectives.