Most asset allocation models incorporate some type of rebalancing feature. Rebalancing a portfolio reallocates resources from those assets that have out-performed to those that have under-performed. It is widely believed that this action helps reduce the risk in the portfolio. This is true because it keeps the portfolio from becoming over weighted by yesterday's best performers. Re-balancing is most effective when the portfolio is inherently more diversified. This provides more opportunity to capture asymmetric asset performance and redistribute it across the asset allocation.