The installation instructions weren't all that clear about whether to mount closer to the hub or rim. What it did make clear was that the spoke mounted magnet had to pass within like 2 mm of the sensor- up near the rim is too far away for them to "see" each other.

Another benefit about mounting closer to the hub (asides from the wheel balancing which i hadn't thought of) is that it's a bit more protected than if it was mounted near the rim.