Methodology:

This portfolio simulation evaluates the effects of various rebalancing strategies using a consistent methodology over a fixed 10-year period from January 2, 2015 through December 31, 2024. All simulations and daily return data were provided by Smartleaf. The $100,000 portfolio tested was a globally diversified 60/40 model composed of VTI (40%), VXUS (20%), BND (30%), and BNDX (10%), with static weights maintained throughout. Rebalancing strategies included Buy-and-Hold (no rebalancing after initial allocation), Annual Rebalancing (calendar-based reset to model weights once per year), and Threshold-Based Rebalancing (triggered when any asset relative to its target weight deviated by more than 1%, 5%, 10%, 20%, 25%, or 30%), applied across daily, weekly, monthly, quarterly, and annual evaluation/lookup frequencies. For example, the target weight of a security is 10% in the portfolio and has 20% relative drift applied. The range would become 8% - 12%. If the current weight of a security is 13%, it breaches the threshold and the security is considered for rebalancing. If no threshold breach occurred, no rebalance was executed at that interval.

All rebalancing trades were assumed to execute at same-day market close. All simulations assume fractional share trading, enabling precise portfolio allocations without the constraints of whole-share rounding. No explicit transaction cost was applied beyond a 2 basis point bid-ask spread to reflect trading friction. A minimum trade size of $10 was enforced to avoid unnecessary micro trades. All dividends were reinvested into the issuing security on the pay date. Simulations excluded taxes, advisory fees, and real-world cash flow assumptions. Performance was measured using Total Return, CAGR, Volatility, Sharpe Ratio, Sortino Ratio, Downside Deviation, two alpha metrics: Rebalancing Alpha and Hypothetical Rebalancing Alpha. Rebalancing Alpha is defined as the excess total return generated by a given rebalancing strategy compared to annual calendar-based rebalancing. It reflects the realized performance benefit (or loss) from applying a threshold-based approach relative to the industry-standard annual rebalance.

To assess the theoretical return advantage of rebalancing over Buy-and-Hold, we calculate Reverse Engineered Hypothetical Returns by applying the Sharpe Ratio of each rebalancing strategy to the volatility of the Buy-and-Hold portfolio. This normalization removes risk-related differences due to limited simulation scope. Hypothetical Rebalancing Alpha is then defined as the difference between these hypothetical returns and the Buy-and-Hold return. This metric quantifies the modeled value of rebalancing, controlling for volatility and behavioral bias. These findings reflect theoretical outcomes under controlled assumptions and should not be interpreted as realized or guaranteed performance. Past performance is no guarantee of future results. While all efforts were made to ensure consistency in simulation methodology, minor discrepancies may exist in the underlying market data or simulation outputs due to differences across data providers. These are not expected to materially affect the conclusions of this analysis.

Zoe Financial, Inc. a Registered Investment Adviser. SEC Registration does not constitute an endorsement of Zoe by the SEC nor does it indicate that Zoe has attained a particular level of skill or ability.
Disclosures:

Zoe Financial, Inc. (“Zoe Financial”) is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. Zoe Financial provides investment advisory services and access to independent registered investment advisers through its platform. The information provided by Zoe Financial is for educational and informational purposes only and should not be construed as personalized investment advice or as an offer to buy or sell any security. All investments involve risk, including possible loss of principal. Past performance is not indicative of future results. Clients should consult with their own financial, tax, or legal professionals before making any investment decisions.SmartLeaf®is the trademark or service mark of SmartLeaf and not affiliated with Zoe Financial. Their inclusion does not constitute an endorsement of Zoe Financial’s services or investment strategies. Zoe does not guarantee SmartLeaf's data accuracy, completeness, or timelinessRebalancing and asset allocation are important investment disciplines but they do not eliminate the risk of loss. Maintaining or adjusting a portfolio to a target allocation may help manage volatility, but it cannot guarantee improved returns, reduced losses, or achievement of investment objectives. Rebalancing may result in transaction costs, tax consequences, or unintended exposures that can reduce overall portfolio performance. Asset allocation does not ensure a profit or protect against loss, and actual client experience may differ significantly from hypothetical or backtested results. Market conditions, client-specific factors, and behavioral risks can all affect outcomes, and no single allocation or rebalancing strategy is appropriate for every investor.