With an ETF, I can hold it for 20 years, and the value keeps compounding. However, with this other method, each annual rebalance takes value out of the account

With an ETF, I can hold it for 20 years, and the value keeps compounding. However, with this other method, each annual rebalance takes value out of the account. Unless I'm sure I can outperform an ETF with this active rebalancing, this tool would have worse outcomes. If I am trying to optimize my portfolio, it seems I should choose ETFs that are composed of the equities I want and use current income to attempt to rebalance (e.g. purchase underperforming equities, instead of selling high performing equities to buy underperforming ones). This tool seems like a worse strategy?