Why do some strategies trade every month and others hardly at all?
Every DMS strategy makes a decision once a month. Whether that decision produces a trade is a separate question, and the answer varies enormously across the lineup.
Two different rebalancing philosophies
Signal-driven strategies trade whenever their rules point somewhere new. A momentum strategy that rotates from equities to treasuries acts on that immediately and completely. If the signal is unchanged, the position is generally left alone.
Band-based strategies hold fixed target weights and only trade when a holding drifts far enough away from its target to matter. Between those breaches they do nothing at all, sometimes for years.
Many strategies combine both: signals decide what to hold, bands decide when it is worth trading to get back to precise weights.
How drift bands work
Suppose a strategy targets 25% in an asset. Rather than restoring exactly 25% every month, it defines a band around that target, and trades only when the position leaves the band.
The Permanent Portfolio strategies use a wide band on their four equal sleeves, rebalancing a sleeve only when it falls below 15% or rises above 35%. They also rebalance every January regardless. In practice this means long stretches with no trading at all.
Other strategies use tighter bands. Triad allows its sleeves to drift within a 5% band before pulling them back. GPMv uses a similar tolerance.
Why not just rebalance every month?
Because precision is not free and it is not obviously better.
- Every trade costs something. Spread, market impact, and in a taxable account, realized gains. Restoring a position from 26.3% to 25.0% incurs real cost to correct a difference that has almost no effect on outcomes.
- Drift is partly a feature. A holding grows relative to the others because it is outperforming. Trimming it immediately and mechanically means systematically selling what is working. Letting it run within a tolerance captures some of that.
- Tax consequences compound. In a taxable account, every unnecessary rebalance realizes gains earlier than needed. Bands defer that.
The tradeoff is that a band-based strategy carries somewhat different weights than its stated targets most of the time. The bands are set so that difference stays within a range that does not change the strategy's character.
What this looks like on the site
Two consequences you will notice in the Allocations view:
Published weights change even when nothing was traded. A portfolio left completely alone still shows different percentages next month, because the holdings grew and shrank at different rates. That is drift, not activity.
Trading costs do not track changes in published weights. The friction model compares each month's targets against what the strategy was actually holding after drift, not against last month's published percentages. A month spent holding costs nothing even though the numbers moved. A rebalance back to unchanged targets does cost something, because real money moved. The Trading Friction FAQ covers this in detail.
Why the difference matters when choosing a strategy
Turnover is a real consideration, not a technicality:
- In a tax-deferred account, high turnover costs you spread and little else.
- In a taxable account, high turnover can meaningfully reduce what you keep. The Tax Profile panel shows how much of a strategy's realized gains historically qualified for long-term treatment, which is largely a function of how often it trades.
- For your own discipline, a strategy that changes position frequently demands more attention and more opportunities to second-guess it than one that sits still for months.
None of this makes low turnover better in the abstract. A strategy that trades often because its rules genuinely call for it is doing its job. But two strategies with similar returns and very different turnover are not equally attractive in every account.
Where to check
Each strategy's page reports its historical turnover and trading costs, and the Allocations view shows exactly what changed month to month. If you want to know what running a strategy would actually involve month to month, that is the place to look before committing to it.