Reallocation is all about shifting your portfolio mix. It happens at different levels. You need to reallocate when a particular asset class goes way beyond the allocation. You also need to allocate within an asset class. For example, if tech stocks have moved up 75% in 1 year then it is time to reallocate in the normal course of events. Remember, reallocation is not only about taking a view on the attractiveness of an asset class. It is also about maintaining a balance in your portfolio. That is the key.

Reallocation is an extremely critical decision as it can have fairly huge opportunity costs. When to get out of certain sectors or certain themes is an important decision. Also the decision on whether to be in equities or debt is a very fundamental decision. There are variety of reasons you should look at re-allocation like change in macros, too much focus on a few sectors and new emerging opportunities. Your decision to reallocate should be largely based on the circumstances.