Corridor rebalancing
Certified Financial Planner glossary · Certified Financial Planner
Definition
A policy that acts only when an allocation drifts beyond a stated band.
Corridor rebalancing in plain English
An IPS permits equities to float from 55% to 65% of the portfolio before trading is required. Corridor rebalancing means you intervene only after allocation drifts outside that band. Calendar rebalancing, by contrast, trades on a schedule even if weights barely moved. Wider corridors usually cut turnover and taxes; narrower bands police the target more tightly. Decide whether the stem's trigger is elapsed time or a corridor breach before naming the method.
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