Which of the following is an indicator that rebalancing may be necessary?

Rebalancing in investment portfolios is a crucial process that helps maintain the desired risk and return profile as market conditions change. When one asset class has significantly outperformed others, it can lead to an unintentional drift in the overall asset allocation away from the investor's intended strategy. For instance, if the target allocation was 60% in stocks and 40% in bonds, but stocks have risen dramatically, the allocation might shift to 75% stocks and 25% bonds. This shift increases the risk level of the portfolio, as a greater proportion is now invested in the higher-risk asset class.

By recognizing that one asset class has outperformed others, the investor can take action to rebalance the portfolio back to the original asset allocation. This not only helps to control risk but also allows the opportunity to sell high and buy low, which is a fundamental principle of effective investing. The decision to rebalance based on performance helps ensure that the investment strategy remains aligned with the investor's goals and risk tolerance.

The other options may indicate important factors in managing an investment portfolio but are not direct indicators for rebalancing. Changes in the original asset allocation being unrealistic could suggest a need for strategic adjustments, but it doesn't necessarily trigger immediate rebalancing.