A portfolio left alone does not stay where it was set. Whatever has performed well grows as a share of the whole, which means the portfolio's risk profile drifts toward whatever has recently succeeded. Drift is not neutral; it is an accumulation of risk that nobody decided to take.
Setting tolerances in advance
Rebalancing works best when the rule is written before it is needed. Tolerance bands around strategic weights convert an emotive decision into an administrative one. The specific bands matter less than the fact that they were agreed when no one was under pressure.
Costs and taxes are part of the calculation. Tolerance bands set too tightly generate activity that erodes returns; bands set too loosely permit meaningful drift. The right answer depends on the portfolio, not on a general rule.
What rebalancing is not
Rebalancing is not a view on valuation and it is not expected to add return. It maintains the risk profile the investor agreed to. Any framework that describes rebalancing as a source of reliable outperformance is describing something else.
This note is general information about investment process. It is not investment, legal or tax advice, not a recommendation, and not an assessment of suitability for any particular investor. Investment involves risk, including the possible loss of capital.