By May, the first third of the year is behind you. Markets have moved, life may have shifted, and the portfolio you started with in January likely looks different today than it did four months ago. That drift — often invisible until you look closely — is exactly why a mid-year review matters. 

Rebalancing is not just a technical exercise. Done thoughtfully, it is one of the clearest ways to ensure your investments still reflect the goals, timeline, and risk tolerance that shaped them in the first place. 

Why Portfolios Drift and Why It Matters 

Different asset classes grow at different rates. When equities outperform bonds, or when one sector surges while another lags, the percentage of your portfolio held in each area shifts — sometimes meaningfully. A portfolio originally designed with a 60% equity and 40% fixed income allocation, for example, can quietly become 70/30 or higher after a strong equity run, exposing you to more risk than you originally intended without a single deliberate decision being made. ¹ 

Market volatility in early 2026 has pushed many portfolios further from their targets than investors may realize. For those who have not reviewed their allocation since year-end, the gap between intention and reality may be larger than expected. ² 

What a Mid-Year Review Should Actually Cover 

Rebalancing is the most visible element of a portfolio review, but it should not be the only one. A meaningful mid-year check-in typically covers several interconnected questions: 

Has your allocation drifted from target? Comparing current holdings against your target allocation — across asset classes, geographies, and sectors — reveals whether any area has grown outsized relative to your plan. Many advisors use a threshold-based approach, reviewing whether any position has moved more than 5% away from its target weight before triggering a rebalance. ³ 

Has your situation changed? A promotion, a job change, a major purchase, a new dependent, or a shift in retirement timeline can all affect the allocation that makes sense for you. The right portfolio is not static — it reflects your current circumstances, not last year’s. 

Are you on track with contributions? May is a useful checkpoint to confirm that contributions to tax-advantaged accounts — 401(k)s, IRAs, HSAs — are pacing toward the annual limits. Spreading contributions across the year rather than concentrating them at year-end reduces timing risk and keeps the strategy on track. 

The Tax Dimension of Rebalancing 

Rebalancing in taxable accounts can trigger capital gains, which is why the process requires care and coordination. Selling appreciated assets to restore allocation may make sense, but the tax cost should be weighed against the benefit. In many cases, there are ways to rebalance more efficiently: directing new contributions toward underweight areas rather than selling, harvesting losses to offset gains elsewhere, or executing rebalancing trades within tax-advantaged accounts where there are no immediate tax consequences. ⁴ 

This is where working with your Wedbush financial advisor adds real value. The goal is not just to restore a target allocation — it is to do so in a way that accounts for the full picture. 

Cambridge Associates’ 2026 Outlook: A Note on Diversification 

For investors whose equity allocations have reached elevated levels after years of strong performance, independent research firms including Cambridge Associates have noted that 2026 may be a timely moment to reassess policy allocations and embrace greater diversification across asset classes.⁵ That perspective reinforces the value of a disciplined mid-year review, not as a reaction to short-term volatility, but as a deliberate step to ensure the portfolio remains aligned with long-term goals. 

Bottom Line: Portfolios drift. Goals evolve. May is a natural moment to close the gap between where your investments are and where they should be. A conversation with your Wedbush advisor about your current allocation, upcoming contributions, and any changes in your situation is a straightforward step with potentially lasting impact. 

Sources: 

[1] https://www.tradingcosts.com/portfolio-rebalancing-guide-2026/ 

[2] https://goldstonefinancialgroup.com/2026-portfolio-rebalancing-time-to-take-action-now/ 

[3] https://www.donkycapital.com/en/guides/asset-allocation-diversified-portfolio 

[4] https://www.bellwetherwealth.com/insights/how-to-rebalance-your-portfolio-for-a-strong-start-to-2026 

[5] https://www.cambridgeassociates.com/insight/2026-outlook-portfolio-wide-views/ 

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