Rebalance Updates are to be applied manually after reviewing them. When a smallcase you hold is rebalanced, you would receive on email notification and the rebalance update would also be visible under 'Pending Actions' on your dashboard
Clicking on the update opens up the rebalance window. Here, you can view the stocks that are being added, stocks that are being removed and stocks that remain unchanged.
You can also edit the rebalance update and make changes to it if you wish to. (Not recommended for beginners) or skip the rebalance update altogether.
Customizing or skipping a rebalance update may cause your smallcase to no longer match the theme, thereby affecting the returns as well.