Rebalance window
You can create model portfolios or investment plans and use them to keep your investment portfolios in balance. Rebalancing creates trade orders to buy and sell securities according to the model. For general information about rebalancing approaches and for instructions, see Rebalance in FA User guide.
The Rebalance window allows you to define the rebalance parameters and the securities to rebalance. The window lists securities in the portfolio or model portfolio/ investment plan linked to the rebalanced portfolio and indicates the shares of these securities in the investment portfolio and model. The portfolio account is also included in rebalancing.
At the top of the Rebalance window, you can define the rebalancing parameters.
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Affected portfolios
The Affected portfolios section defines which portfolios are rebalanced.
- Rebalance against
The target for rebalancing, in the priority order: if the first one in the list is defined, it is used – otherwise, the one id used, and so on. The targets can be:
"Model portfolio", "Investment plan" – Model portfolio or investment plan linked to the portfolio.
"Portfolio itself" – Target shares you specify in the Rebalance window.
"Empty portfolio" – An option to empty the portfolio – this will set all the new shares as 0 % and sell everything away, regardless of the linked model or plan.
- Include sub-porfolios
Aggregates positions and investment plan/ model portfolio contents also from the rebalanced portfolio's subportfolios. This allows you to divide holdings into subportfolios and rebalance everything at once through the main portfolio. Trade orders are created either to the main portfolio or the sub-portfolios based on which portfolio or portfolio's investment plan / model portfolio the trade order's security can be found in: for sells of existing positions, trade orders are created in the same portfolio where the position currently is, and for buys, trade orders are created in the same portfolio which has the position in the investment plan or model portfolio.
Rebalance parameters
The Rebalance parameters section defines rebalancing logic.
- Date
The rebalancing date. This date affects:
The market prices, rabalanced portfolio shares, trade order amounts. The percentage shares of securities in the portfolio are determined based on the market prices on the rebalancing date. The market prices on this date are used to calculate the amount in the suggested trade orders.
The content of the model portfolio/ investment plan. The target shares are fetched based on the selected rebalancing date
- Restrict rebalancing to accounts
Restrict rebalancing to only reach the target level for portfolio accounts, without any other buys or sells. This feature has different effects depending on the rebalance method (buying with extra cash or using cash from sells) – see Rebalance methods.
With the conservative rebalancing method, securities are bought and sold only to achieve the target level of the account. If the account has excess cash, the selected securities (largest first) are bought as long as there is available cash but nothing is sold. If the account has a lack of cash, the selected securities (largest first) are sold until the account reaches the target level - nothing is bought and securities are sold only to rebalance the account to the defined level.
With the exchange method, if the account balance is below the target, it is first rebalanced with sells. After this, the excess cash from sells is used to buy the securities to be rebalanced, but securities are sold only to cover all the necessary buys. If there are Executable sell trade orders, the cash coming in from these is taken into account when selling the securities.
With full rebalance, if the account balance is below the target, it is first rebalanced with sells. After this, the excess cash from sells is used to buy the securities to be rebalanced, but securities are sold only to cover all the necessary buys.
Note
You can also define the rebalance settings in Preference ("Define target range for portfolio's cash balance", "Define how much negative cash balance is increased by to cover all negative cash" and "Define how much positive cash balance is decreased by to ensure positive cash balance"). These preferences determine how rebalancing tries to achieve the target level for accounts. See Rebalancing for details.
- Rebalance method
Rebalancing approach: conservative rebalance, full rebalance, full rebalance including outstanding orders, exchange, invest cash, cover for cash, and model change (see Rebalance methods).
- Filter out small trade orders based on
The minimum size for the trade orders that rebalancing should create. The size restrictions don't apply if you sell an entire position away from the portfolio (see Selling an entire position). Set the minimum difference between the portfolio position and the model as:
"Minimum change % (absolute/ percentage points)" - The difference in percentage points.
"Minimum change % (relative / percentage change)" - The relative difference in percentage.
"Minimum trade amount" - The minimum trade amount in portfolio currency. Alternatively, you can define a Minimum trade amount for each of your securities (see Security window).
"Position is within min/max share" - The difference defined with the minimum and maximum thresholds in the model. Trade orders are created only if your position deviates outside of the minimum and maximum thresholds. The minimum trade amount for each trade order is calculated as follows:
For "buy": ( target share - min share ) * portfolio value
For "sell": ( max share - target share ) * portfolio value
Positions that don't have the thresholds specified in the model are rebalanced without filtering when "Position is within min/max share" is selected.
- Use cash from accounts
Accounts to use for buys if you select to buy with extra cash in the portfolio. This option allows you to keep your portfolio fully invested and exclude certain accounts (for example, accrued fee accounts) from rebalancing.
"All accounts" – Use cash on all accounts. You can choose to use available credit or repay the used credit (see the Use portfolio credit field below).
"Cash accounts" – Use cash on the accounts marked as "cash accounts" in the Portfolio window, Accounts tab.
"Cash and credit accounts" – Use cash on cash and credit accounts. You can choose to use available credit or repay the used credit (see the Use portfolio credit field below).
"Default account only" – Use cash on the portfolio's default account – the first account in the list in the Portfolio window, Accounts tab. If this account is a credit account, you can choose to use available credit or repay the used credit (see the Use portfolio credit field below).
- Use portfolio credit
Use credit account for buys. Choose if you want to use the positive account balance and available credit for buys, and if you want to cover the negative balance. The option is shown if you selected "All accounts", "Cash and credit accounts" or "Default account only" in Use cash from accounts.
"Don't use portfolio credit" – Use only positive balance on the credit account for buys, without repaying the used credit.
"Use portfolio credit" – Use available credit and positive balance on the credit account for buys, without repaying the used credit.
"Repay portfolio credit" – Use positive balance on the credit account. In case of negative balance, rebalance the credit account account to 0. The cash is rebalanced to the default portfolio account, and you can then repay the credit manually. If a portfolio has no accounts other than the credit account, the credit is repaid automatically.
- Calculate fees to trade orders
An option to calculate fees, or to estimate the effect of an upcoming fee when generating buy and sell trade orders. If a fee is calculated, the effect of the fee is taken into account when determining how many units you can buy with you available cash and how much money you get from sells. This allows you to estimate the effects of upcoming transaction fees more accurately. Fees are also saved in the Fees field for each trade order.
"Don't calculate fees" - Don't calculate fees in trade orders.
"Calculate portfolio-specific fees" - Calculate a transaction fee defined in the portfolio (Portfolio window, Fees tab).
"Calculate fixed fees" - Calculate a fee defined as a percentage in the field available next to the selection.
Trade order parameters
Trade order parameters section includes criteria for defining how trade orders are created
- Set accounts to trade orders
An option to define accounts for trade orders (Account filed):
"Don't set accounts to trade orders" - Create trade orders with "No account".
"Set the default account to trade orders" - Set the portfolio's default account – the first account in the list in the Portfolio window, Accounts tab.
"Set the currency account (or default account) to trade orders" - Use the account with the same currency as the trade order. If such account doesn't exist, this option uses the default account of the portfolio. If the portfolio doesn't have accounts, then the shared accounts for the portfolio are used in the same order: first using the shared account with the same currency as the trade order, and if not found, then using the shared default account.
- Create trade orders with status
The status of trade orders.
- Set trade order tags
Tags to add to trade orders. For example, you can use tags to mark trade orders with execution instructions.
- Set portfolio tags
Tags to add to portfolios affected by rebalancing. This allows you to for example mark the rebalanced portfolios.
- Rebalance memo
Comments and notes on your rebalances, for example, references. Memos are stored in the Rebalance view, which allows you to search for conducted rebalances.
Summary of the rebalanced portfolios
The bottom of the Rebalance window shows a summary of the positions of the rebalanced portfolio(s). The rebalanced portfolios' positions are grouped per rebalanced portfolio: the icon next to the portfolio ID indicates whether the portfolio is rebalanced against model portfolio, investment plan or portfolio itself, and moving your mouse above a portfolio provides you with more details on how the portfolio is rebalanced, such as the name of the linked model portfolio and the full name of the rebalanced portfolio.
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The content is divided into columns:
Security - Position affected by the rebalance (a position in the portfolio or a position in the model).
Amount – The current amount (number of units) of the security in the portfolio.
Purchase value – The current purchase value of the position in the portfolio.
MPrice – The latest available market unit price of the security, with the date (and time) of the price shown in parentheses.
Market val. – The total market value of the position in the portfolio with the latest available market price.
Change - The change between the purchase value and the market value of the position.
Share % – The current percentage share of the position in the portfolio, calculated with the current market price from the total value of the portfolio.
Min % and Max % – The minimum and maximum thresholds defined for the position in its investment plan or model portfolio.
Model % – The share of the security in the model portfolio or investment plan.
New % – Target share. The field shows the percentage share of the security in the model, if any model is linked to the portfolio. Otherwise, the percentage share of the security in the portfolio is shown. You can edit the value before rebalancing the portfolio and creating trade orders.
Difference % – The percentage difference between the percentage shares of the security between the portfolio and the model portfolio.
Difference - The difference between the shares of the security in the portfolio and the model portfolio in portfolio currency.
You can select portfolios and the positions to include in rebalancing.
When the information for the rebalancing is defined and manually adjusted if necessary, the investment portfolios are rebalanced and trade orders are suggested to be created with the Rebalance button.
Trade orders suggested by rebalancing
You can view the suggested trade orders after you click Rebalance. You can use filters to search for trade orders within the suggestion.
Only visible trade orders are saved - to save all suggested trade orders, clear all filters.
Saving the trade orders is done in the background - you can close the trade order listing and continue using FA while the trade orders are being created. Once the trade order creation is finished in the background, you will see a notification at the bottom-right corner of the view: "Trade orders done. Created trade orders: x.
You can view the trade orders in the Trade orders view. If a portfolio is rebalanced again, Open trade orders are replaced with new trade orders.