How much must be bought or sold to restore a target allocation?

Rebalancing compares current asset values with target weights at the same total portfolio value. The output is a set of transfers around that total, so purchases and sales should offset before costs.

Turning target weights into trade amounts

Target value = Portfolio value × (Target% ÷ 100)Difference = Target value − Holding valueShares to trade = Difference ÷ Share pricePositive means buy, negative means sell.

Restoring an allocation without changing the total

The default allocation shows current amounts and desired percentages. The calculator converts each target weight into a target value and measures the trade required from the current value.

Illustrative inputs; currency amounts below use USD. Rates and prices are assumptions, not live quotes.

Total portfolio value
$50,000.00
Value of this holding
$9,000.00
Target allocation
25%
Current share price
$45.00

Step-by-step calculation

  1. Target holding = 50,000 × 25 ÷ 100 = 12,500.
  2. Adjustment = 12,500 − 9,000 = 3,500. Positive means buy; negative means sell.
  3. Units to trade = 3,500 ÷ 45 = 77.777778. The model permits fractional units and excludes dealing costs.

Intermediate figures are rounded for reading. Results use the full calculation precision.

Shares to buy or sell77.78
Amount to trade$3,500.00
Target value$12,500.00
Current weight18%

Reading buy and sell differences

Positive differences indicate amounts to add and negative differences indicate amounts to reduce, following the output labels. Larger allocation drift produces larger suggested transfers.

Targets, taxes and transaction constraints

Targets must describe a complete allocation. If target weights do not total 100%, the results do not represent a fully allocated portfolio.

  • Portfolio value is unchanged while the rebalance is calculated.
  • Every target is expressed as a percentage of the same total.
  • Tax, spreads, fees, minimum trade sizes and new cash are excluded.

Calculations related to portfolio rebalancing

The following tools examine neighbouring parts of the same calculation without changing the inputs or assumptions used above.

References

Sources and conventions

Quick answers

Frequently asked questions

Why is the shares-to-trade result negative?

A negative result means the holding is above its target value, so the calculated difference represents shares to sell.

Does the calculator round to whole shares?

No. It divides the cash difference by share price and can return fractional shares.

Are taxes and transaction costs included?

No. Target value and shares to trade are calculated before tax, spreads and trading fees.

Calculation method and limitations · Report an error

Educational content only. This guide is not financial advice.