You planned carefully. But is your portfolio still on the path you set?

You may have started with the perfect asset allocation—say, 60% equity and 40% debt. Balanced. Aligned with your risk appetite. Focused on your long-term goals.

But as markets move, so does your portfolio.

Over time, your equity grows faster than debt, or vice versa. You don’t notice it at first—but 18 months in, your 60:40 is now 75:25. Suddenly, you're taking more risk than you signed up for.

That silent shift is called portfolio drift—and understanding it is key to maintaining control over your wealth.

1. What Is Portfolio Drift?

Portfolio drift refers to the gradual, unintentional change in your asset allocation caused by uneven growth of different asset classes.

For example:

• Equity markets surge

• Debt or gold returns stay flat

• Your equity allocation increases disproportionately

The result? A riskier, misaligned portfolio—even though you didn’t make a single change.

2. What Causes Portfolio Drift?

✅ Market Movements

Different assets grow at different rates. Equity can rally 20% while debt grows 5%.

✅ Lack of Rebalancing

Without periodic reviews, you let winners dominate—causing imbalance.

✅ SIP Contributions Skewing Allocation

If most of your SIPs go into equity funds and none into debt, your portfolio tilts over time.

✅ Changes in Fund Strategy

A fund that shifts from large-cap to mid-cap, or becomes more aggressive over time, can unknowingly increase your risk.

3. Why Portfolio Drift Matters

❌ Risk Misalignment

You might unknowingly be exposed to more volatility than your risk tolerance allows.

❌ Goal Mismatch

Your investments no longer match your time horizon or the objective you planned for.

❌ Inefficient Returns

When one asset class dominates, you miss out on the benefits of diversification—like smoother returns and downside protection.

❌ Emotional Investing

Sudden drawdowns in an equity-heavy portfolio can cause panic selling—undoing years of progress.

4. Real-World Example

Original Allocation (Year 0):

• Equity: 60%

• Debt: 30%

• Gold: 10%

After 2 years of equity rally:

• Equity: 75%

• Debt: 20%

• Gold: 5%

🧠 You’re now overweight equity, underweight stability. One market dip could hurt far more than you expected.

5. How to Detect Portfolio Drift

🧮 Annual Portfolio Review

Use tracking tools (like Kuvera, Zerodha, ET Money) to check current asset mix vs. your planned allocation.

📊 Deviation Thresholds

If any asset class moves 5–10% beyond target allocation, it’s time to rebalance.

📆 Set Calendar Alerts

Don’t rely on memory. Schedule semi-annual or annual reviews to check and realign.

6. What Is Portfolio Rebalancing?

Rebalancing means adjusting your investments to bring them back to your original target allocation.

You can:

• Sell overweight assets (e.g., equity) and buy underweight ones (e.g., debt)

• Redirect new investments (e.g., SIPs) to lagging asset classes

• Use dividends or bonus returns to fund reallocation

7. When and How Often to Rebalance

🗓️ Time-Based

Review and rebalance once or twice a year, regardless of market movements.

📉 Threshold-Based

Rebalance when any asset class drifts 5–10% away from the target.

🎯 Goal-Based

If a goal is approaching (e.g., 2 years away), shift from equity to debt regardless of market conditions.

8. How to Rebalance Smartly

✅ Avoid Emotional Triggers

Don’t rebalance based on fear or greed. Stick to your plan.

✅ Consider Tax Impact

Rebalancing may involve capital gains. Do it strategically, using allowances (e.g., ₹1 lakh LTCG exemption for equity).

✅ Use STPs

If you need to move a large amount from one fund to another, use a Systematic Transfer Plan to reduce risk.

✅ Work With an Advisor

Rebalancing can get tricky with multiple goals. A planner helps ensure alignment across the board.

TL;DR — Too Long; Didn’t Read

• Portfolio drift is the silent shift in your asset allocation due to market movements or one-sided contributions

• Over time, drift can expose you to more risk—or reduce your potential returns

• Review your portfolio annually, or whenever your asset weights deviate by 5–10%

• Rebalancing brings your portfolio back in line, keeping your wealth-building strategy on track

• Don’t “set and forget”—set and course-correct.

📩 Need help assessing whether your portfolio has drifted from your plan? Let’s do a full review and rebalance it to match your goals, risk comfort, and life stage.