Rebalancing Portfolio while on Margin

[wfeagin3]

Can you rebalance a portfolio that is on margin if you are below the 50% margin but above the maintenance requirement? Would rebalancing require you to meet the Reg T initial margin requirement?

I have a risk parity portfolio that I am going on margin with and backtesting over the financial collapse. The margin stays well above the maintenance requirement. But I would want to rebalance during this time? Is this possible?

Thanks!

 

[MoreLeverage]

If you're below the initial margin requirement but above the maintenance one (so no margin call, yet), you can sell things but may not be able to buy different ones if the sale doesn't free up enough equity to put you over the initial margin limit. Or you might be able to buy some but not all of your rebalancing purchase after selling the first asset.

 

[Daal]

You are levered 2.5 to 1?

 

[wfeagin3]

You are levered 2.5 to 1?

When I backtest and am in a drawdown, yes, I get close to that leverage.

 

[wfeagin3]

If you're below the initial margin requirement but above the maintenance one (so no margin call, yet), you can sell things but may not be able to buy different ones if the sale doesn't free up enough equity to put you over the initial margin limit. Or you might be able to buy some but not all of your rebalancing purchase after selling the first asset.

Thanks for the reply. Sounds like I would be locking in some losses. I most likely will hold my positions to avoid locking losses in. And rebalance when I'm back above initial margin requirements.