Step by step: How to re-balance your TD e-Series portfolio

If it’s your first time re-balancing your TD e-Series index fund portfolio through the TD EasyWeb portal, it’s always a good idea to make sure you are doing it correctly. It’s not a difficult process, but the following will show you how to calculate how much to move from one fund to another, and the exact steps needed to re-balance your TD e-Series index fund portfolio.

Why re-balance you index fund portfolio?

A person will re-balance their portfolio based on their target percentage allocation in all of the different funds they hold to ensure they retain a diversified portfolio. For example, in my personal portfolio of TD e-Series Index Funds, my personal target is 23% in the Canadian TD stock index, 23% in the American TD stock index, 23% in the International TD stock index, and 31% in the Canadian TD bond index.

Over the year, your various index funds will go up and down, and when they stray enough from your target, it’s time to re-balance – sell from the index funds that are doing well, and re-invest them into the ones that are lagging behind.

Calculating your re-balance

Calculating your re-balance if fairly simple in theory, find which funds are above your target percentage, and which ones are below, and switch them around. Here’s a quick example below:

In this example, I would need to take gains from my Canadian and US Index Funds, and put them predominantly in my International Index Fund, and some into my Canadian Bond Index Fund. In this case, I would do the following switches:

• $219 from my US Index Fund to my International Index Fund
• $62 from my Canadian Index Fund to my International Index Fund
• $57 from my Canadian Index Fund to my Canadian Bond Index Fund

You definitely don’t have to be exact with matching your fund amounts to their target percentages. There are no trade fee’s or mimimum amounts when making switches in the TD EasyWeb system, so you can make as many small switches as you need!

Re-balance calculator

For a quick calculation to give you an estimate of where you should be moving your funds from and to, you can fill out your target asset percentages and current asset values below :

Now the how

Now that you’ve figured out how much you want to switch between your funds to balance your TD e-Series portfolio, the next step is actually making the switch.

Logging in to EasyWeb

Same as when you bought your funds for the first time, this is the easy part. You can Buy, Redeem, and Switch funds through your regular TD EasyWeb banking portal, where you do all of your day-to-day online banking.

Find your investments

Once logged in, click on the ‘Investments’ section on the left hand menu.

This page is the same spot where you initially would have bought your funds. It lists all of your different investment accounts, and you should see your Mutual Fund TFSA and Mutual Fund RRSP.

Switching Mutual Funds

This is the main area that can cause some people confusions. When re-balancing your funds, you don’t actually want to ‘sell’, ‘redeem’ or ‘buy’ funds. The key action you want to do here is ‘Switch Mutual Funds’. This action will allow you to move funds without having funds removed from your TFSA or RRSP. If you were to sell funds from your TFSA or RRSP and then re-buy different funds, you will suffer consequences associated with account withdrawals (loss of contribution room for the year).

Selecting the right account

Always make sure you in the correct account before switching! You don’t want to attempt to re-balance your portfolio in your TFSA, but accidentally make the moves in your RRSP account if you have some of the same funds.

Then select the holding that you wish to move funds FROM and click ‘Switch Mutual Funds’.

Making the trade

Now it’s time to fill in the details of the trade. Double check the Account, ensure that the action is ‘Switch’. Also and make sure the ‘From’ section indicates the holding you want to remove funds from.

Fill in the dollar amount you would like to switch and select the fund you want to re-balance into. If you are having trouble finding the funds that you want to move it to, you can find the TD e-Series Category name and Fund name in this post detailing how to buy TD e-Series funds.

Once all of the details look correct, click “Next”.  The next page will give you a chance for one final review before the switch is actually submitted.

Confirming trade details

On this confirmation page, it’s always good to check everything over once more! Be sure that your money is being moved around from and to all the right places.

At this point you can click ‘I accept’ and the trade will by submitted!

All done

Your switch has been submitted! The order will be placed at the end of the business day, (the next day if after 3pm ET). You can now repeat this process for all of the the other re-balancing transactions you need to make, and you will now have a fully balanced portfolio!

Additional reading

• TD e-Series Funds – what are they, where do I buy them, and how much do they cost?
• Step by step: How to buy TD e-Series Index Funds

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