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Rethinking rebalancing: why efficiency matters

10 September 2025

How Rathbones Model Portfolio Service reduces disruption, improves control and supports better outcomes.

For many advisers, rebalancing has become a hidden source of friction, and one that quietly creates complexity, client confusion and administrative workload. The restructured Rathbones Model Portfolio Service (MPS) offers a more efficient, flexible way to keep portfolios aligned with client needs, without the disruption often caused by conventional quarterly rebalancing.

Article last updated 19 September 2025.

The problem with traditional rebalancing

Regular rebalancing is often presented as a positive discipline – a way to keep client portfolios aligned to their chosen risk profile. But in practice, the way many MPS providers implement rebalancing can be inefficient, disruptive and difficult to explain. Some common issues include:

Clients out of the market for days at a time, due to sell–settle–buy trading cycles on platform
Unnecessary Capital Gains Tax (CGT) crystallisation in general investment accounts (GIAs)
Increased transaction costs and portfolio turnover
Rebalancing driven by the calendar, not investment led

For advisers, this means more admin, more client questions, and more friction – particularly when trades create no clear value or introduce tax consequences the client wasn’t expecting.

Our LED framework

At Rathbones, we’ve taken a different approach. The new MPS has been designed around three in-house funds, aligned to our Liquidity, Equity-type risk and Diversifiers (LED) investment framework.

A more flexible, pragmatic approach

At Rathbones, we’ve taken a different approach. The new MPS has been designed around three in-house funds, aligned to our Liquidity, Equity-type risk and Diversifiers (LED) investment framework.

These building blocks are portfolios in their own right, each fulfilling a specific function:

Liquidity to support stability and capital preservation
Equity-type risk to provide long-term growth potential
Diversifiers to help smooth returns in volatile conditions

By using this structure, the investment team can manage most rebalancing within the funds themselves, adjusting exposures and responding to market changes without needing to trigger client-level trades.

This approach creates a number of key advantages:

Minimal time out of market during repositioning
Fewer trades on platform, reducing administrative burdens and complexity
Lower risk of CGT events in taxable accounts
More responsive decision-making

It’s a more intelligent way to manage portfolio alignment – one that allows investment decisions to be made when they’re needed, not just when the calendar says so.

Rebalancing when needed, not just when scheduled

Unlike many traditional MPS models, Rathbones does not default to automatic rebalancing. Instead, portfolios are monitored actively and adjusted only when necessary to remain within their defined risk parameters.

Because most changes happen inside the LED funds, rather than between external holdings, clients stay invested throughout. That means no lengthy settlement gaps, no duplicated trading, and no avoidable market exposure risks.

For advisers, this reduces the administrative load and provides a clearer, more defensible story to clients.

Designed for efficiency, built for today

With Consumer Duty placing greater emphasis on ongoing value and consistency, advisers are re-examining the underlying mechanics of the investment services they recommend. Rathbones MPS has been purpose-built to help:

Reduce friction around portfolio changes
Lower trading costs and tax implications
Deliver smoother experiences across a wide range of clients

This matters particularly for clients in drawdown, with legacy GIAs, or with complex planning needs. But the benefits apply to any client who values a clear, consistent approach to investment.

For more information on our service please visit: Rathbones Model Portfolio Service on Platforms.

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What next?

To explore how the new Rathbones MPS can support your advice process, please speak to your Rathbones Business development director or complete the form and our dedicated adviser support team will be in touch. We’re here to help you deliver better outcomes with confidence for your clients, your team and your business.

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