News
Pulse Launches New High Volume Portfolio Modelling & Rebalancing Tool
February 2005
The minimisation of risk is a key component of any investment management strategy, and part of this process for many Pulse clients is the running of portfolios to strict models. To date, modelling functionality has been provided either in the browser based Fund Manager Workbench, or within the core Pulse product via the standard bulk dealing. However, an add on to this functionality is now available which enables:
- portfolios to be associated with models
- switching within a model or sub-model across all constituent portfolios
- re-balancing of the holdings belonging to all portfolios associated with a model
This model has many different purposes. Firstly, when a new client is taken on, the model can be applied to their existing holdings and cash. The model will always contain an instruction to sell all non-model stocks, so all stocks not already in the model will be flagged for disposal. The only exception to this is where stocks currently held are deemed worthy of retention as the profile and likely performance is similar to an existing model stock. An example of this may be an index tracker managed by a different fund manager to the one held in the model. In such circumstances, the existing holding will be retained with no transaction generated in the equivalent model fund.
The model can also be used for switching. A simple switch can be performed within a sub-model without affecting any of the other constituent parts by creating an instruction to sell all or part of a holding and reinvest the proceeds in the relevant proportions in one or more stocks.
Finally, the model can be used to rebalance all portfolios associated with the model. This will generate a series of buy and sell instructions to bring all portfolios into line with the model. This is subject to a minimum bargain size, so you can be sure that it will not generate instructions for inconsequential values which irritate clients. Where volumes are high and bespoke considerations play little part in the management process, this functionality can be very beneficial.
