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How to Rebalance Your Portfolio Automatically Without Paying Fees

Let’s be honest – when you first set up your investment portfolio, you probably felt pretty organised. You carefully allocated your money across different assets, perhaps 60% in global equities, 20% in bonds, and 20% in property funds. You had a plan. Life was good.

Fast forward six months, and your portfolio looks nothing like what you intended. That tech fund has shot up 25%, your bonds have barely moved, and suddenly your carefully balanced portfolio is completely lopsided. Sound familiar?

This is where portfolio rebalancing comes in – and here’s the good news: you can rebalance your portfolio automatically without paying fees, saving yourself both time and money. In this guide, we’ll walk you through exactly how to do it, step by step, using tools and platforms available right here in the UK.

What Is Portfolio Rebalancing (And Why Should You Care)?

Portfolio rebalancing is simply the process of realigning your investments back to your original target allocation. Think of it like tending a garden – some plants grow faster than others, and occasionally you need to trim back the overgrown bits to keep everything in balance.

Here’s a practical example: Let’s say you started with £10,000 split evenly between two funds – £5,000 in each. After a year, one fund has grown to £7,000 while the other has only reached £5,500. Your 50/50 split is now closer to 56/44. To rebalance, you’d sell some of the winner and buy more of the laggard to get back to 50/50.

Why Rebalancing Matters for UK Investors

There are several compelling reasons to keep your portfolio balanced:

• Risk management: Without rebalancing, your portfolio naturally drifts towards riskier assets (since equities typically outperform bonds over time). This means you could end up taking more risk than you’re comfortable with.
• Disciplined investing: Rebalancing forces you to sell high and buy low – the opposite of what our emotional brains want to do.
• Staying aligned with your goals: Your original allocation was based on your age, risk tolerance, and financial goals. Letting it drift defeats the purpose.

Important caveat: Rebalancing doesn’t guarantee better returns – it’s primarily a risk management tool. Some years a drift-heavy portfolio will outperform a rebalanced one. The benefit is in maintaining your chosen risk level.

The Hidden Costs of Traditional Rebalancing

Historically, rebalancing came with some annoying costs that ate into your returns:

• Trading fees: Every time you bought or sold, you’d pay commission to your broker.
• Platform fees: Some platforms charged extra for multiple transactions.
• Spread costs: The difference between buying and selling prices.
• Your time: Manually calculating and executing trades is tedious.

The good news? The UK investment landscape has transformed dramatically in recent years. Competition has driven fees down, and automation has made the whole process hands-off. You can now rebalance your portfolio automatically without paying fees – or at least, without paying extra fees beyond what you’re already paying for your platform.

Four Ways to Rebalance Your Portfolio Automatically Without Paying Fees

1. Use a Robo-Adviser with Built-In Rebalancing

This is the simplest option for most UK investors. Robo-advisers are FCA-regulated platforms that automatically manage your investments, including rebalancing, for a single annual fee.

Popular UK options include:

• Nutmeg: One of the UK’s largest robo-advisers, charges 0.25-0.75% annually depending on your portfolio size and type. Automatic rebalancing is included.
• Moneyfarm: Fees range from 0.35-0.75%, with rebalancing handled automatically.
• Vanguard Investor: Charges just 0.15% platform fee (capped at £375/year) for their managed portfolios, which include automatic rebalancing.
• InvestEngine: Offers a managed portfolio option at 0.25% with automatic rebalancing, or a DIY option with free trading.

The beauty of robo-advisers is that rebalancing happens in the background. You don’t need to lift a finger, and there are no extra transaction fees – everything is wrapped into that single annual percentage.

Who this suits: Complete beginners who want a truly hands-off experience and are happy to pay a small fee for convenience.

2. Choose All-in-One Funds That Self-Rebalance

Here’s a clever approach that many UK investors overlook: instead of building a portfolio from multiple funds, invest in a single multi-asset fund that rebalances itself internally.

Popular options include:

• Vanguard LifeStrategy funds: Available in different equity/bond splits (20/80, 40/60, 60/40, 80/20, 100/0). The fund automatically maintains its target allocation.
• HSBC Global Strategy portfolios: Similar concept with different risk levels.
• BlackRock MyMap funds: Target-risk funds that automatically rebalance.

These funds typically have ongoing charges (OCF) of around 0.22-0.25% – and that’s it. No platform rebalancing fees, no trading costs, no spreadsheets. The fund manager handles everything internally.

You can buy these through fee-free platforms like Trading 212 or InvestEngine, meaning your only cost is the fund’s OCF. For a £20,000 portfolio, that’s roughly £44-50 per year – pretty reasonable for completely automated portfolio management.

Who this suits: Investors who want simplicity, low costs, and don’t need a custom allocation.

3. Use Cash Flow Rebalancing on Commission-Free Platforms

This is a clever technique that avoids selling altogether. Instead of selling your winners to buy your losers, you simply direct new contributions towards the underweight portions of your portfolio.

Here’s how it works in practice:

1. You have a target allocation (say, 70% global equities, 30% bonds)
2. Each month, you check which asset class is below target
3. You direct your monthly contribution entirely to the underweight asset
4. Over time, this naturally brings your portfolio back into balance

Several UK platforms now offer commission-free trading, making this approach genuinely free:

• Trading 212: No commission on stocks and ETFs, FCA regulated
• InvestEngine: Free DIY investing with no trading fees
• Freetrade: Free basic account with commission-free trades (ISA costs £5.99/month)

Some platforms like InvestEngine even let you set target allocations and will automatically direct your contributions to rebalance – essentially automating this whole process.

Who this suits: Regular investors who make monthly contributions and want maximum control with minimum cost.

4. Set Up Automatic Rebalancing Triggers with InvestEngine

InvestEngine deserves special mention because their DIY portfolio feature lets you set up automatic rebalancing without