Diversification and Asset Allocation are often confused. They mean different things.
I explain the differences in the article below. Once you understand the difference, you may design a target allocation consisting of different kinds of investments that do different things at different times. Note, by kinds: they all may be in indexed mutual funds, however what makes up those funds are different. For example, international companies in one and only domestic companies in another.
Once you understand the above, rebalancing begins to make sense. Read below to see how all that fits together.