Go to: PM&R Help Menu
Overview
Rebalance Types
Rebalance Objectives
Field Definitions
Create a Rebalance:
1) Enter Rebalance Information
2) View Account or Household Drift
3) Review or Edit Rebalance Preferences
4) Run the Rebalance
Other Processes, if Entitled:
- Edit a Rebalance
- Establish Rebalancing Preferences
- Customize the Window
Rebalancing a portfolio (client, group, account, or household) generates orders proposed to bring the portfolio back into alignment with the targets and tolerances defined by the chosen Portfolio Modeling & Rebalancing (PM&R) model. From the available rebalance types, you must choose a rebalance objective.
If you create a new trade restriction in Wealthscape, make modifications to an existing trade restriction, or create or edit a client or group while PM&R is open, you can capture and immediately apply those updates for use in PM&R.
The available rebalance types are Standard and, if entitled, Household. For both types, drift reports help you identify where positions have fallen outside of the tolerances defined by the model. Drift reports are generated following the nightly cycle or you may run your own Ad-hoc Drift Report. (Run Drift Reports)
Standard Rebalance
A Standard rebalance proposes orders that realign each account individually according to the assigned model. Use a Standard rebalance for an individual account, or for accounts assigned to a client or group.
Household Rebalance
If entitled, a Household rebalance proposes orders that minimize drift across accounts within a client designated as a "household." A Household rebalance collectively ensures that the market value of each individual account remains the same before and after the rebalance. For example, a model comprised of 25% of security ABC is assigned to a household of five accounts. When running the Household rebalance, it is acceptable for each account to have unequal allocations of ABC, as long as 25% of the total asset value across the five accounts is allocated to ABC.
Other guidelines:
Every account within the client is included in the Household rebalance. Unlike a Standard rebalance, you cannot exclude accounts from a Household rebalance. To exclude accounts, you must create a separate household that contains just the accounts you want to rebalance. (Create a Household for Rebalancing)
Only equivalences assigned to the household are considered when performing the rebalance. (View Equivalences)
The steps to create a rebalance vary based on your objective for the rebalance.
| Objective | Summary | Highlights |
|---|---|---|
| Target | Generates orders that bring the account back into alignment within the security targets defined by the model. |
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| Tolerance | Generates orders that return all securities back between the minimum and maximum tolerance ranges defined by the model. A rebalance may, for example, sell securities that are in tolerance down to their minimums to raise funds to buy those securities that are below their minimums. |
|
| Out of Tolerance Securities Only | Generates orders only for securities that fall outside of the minimum and maximum tolerance ranges defined by the model. |
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| Invest Cash - Buy Proportional | Generates buy orders proportionally using uninvested cash to bring the cash balance to zero. |
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| Invest Cash - Minimize Trades | Generates buy orders using uninvested cash to bring the cash balance to zero. |
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| Generate Cash | Generates sell orders for a designated amount of cash to withdraw from the account. |
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| Liquidate Account | Generates sell orders for all tradeable positions in an account. |
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You may run a rebalance using a different model than the one currently assigned to a portfolio. This feature simply enables you to choose a different model for the rebalance, while still maintaining the existing model assignment.
Once the accounts selected for the rebalance list on the window, balance information displays as of the close of the previous business day.
To enter rebalance information
Select Rebalances > Rebalance Accounts.
Enter the Rebalance Name, up to 100 characters.
Select the Rebalance Type:
Standard
Household (If entitled)
From Rebalance To, indicate your rebalance objective:
Target
Tolerance
Out of Tolerance Securities Only
Generate Cash
Invest Cash - Buy Proportional
Invest Cash - Minimize Trades
Liquidate Account
(If entitled) Review the Transaction Disposal Method:
STANDARD REBALANCE
(Optional) To deplete tax lots using a method other than the default account-level method, from Transaction Disposal Method, choose an option. (Cost Basis Disposal Methods)
HOUSEHOLD REBALANCE
(Required) Choose an option from Transaction Disposal Method.
Note
If you choose a Transaction Disposal Method for the proposed orders, that method does not replace an account's established disposal method, which you can view in the Default Cost Basis Disposal Method column.
On the Accounts tab, add the portfolios to rebalance.
STANDARD REBALANCE
To add a single client, group, or account:
- Select Add.
- Select the magnifying glass.
- The window lists your authorized clients, groups, or accounts.
- Choose a client, group, or account and select Add.
- You cannot choose a client or account associated with a household.
To add client(s), group(s), or account(s) assigned to another model:
- Select Add Clients, Groups, Accounts assigned to a model.
- Select the magnifying glass.
- The Select a Model window lists your available models.
- In the Model Name column, select a link.
Note
On the PM&R Dashboard, view your firm's top 10 models by number of associated accounts. (PM&R Dashboard)
HOUSEHOLD REBALANCE
To choose a household:
- The Add drop-down list defaults to Household Name.
- Select the magnifying glass.
- Choose a household that you created.
To exclude an account from the rebalance:
STANDARD REBALANCE
- Account(s) now list in the Accounts Selected table.
- By default, all are selected to participate in the rebalance.
- Clear an account's check box to the left of the More Info column.
- If a HOUSEHOLD rebalance, you cannot exclude an account.
Note
If the client or group contains more than 100 accounts, you cannot exclude accounts. After the rebalance runs, however, you can delete proposed orders for accounts you wanted to exclude before sending the orders to the Orders Unsent window.
To choose a different model than the one assigned, if needed, from Model Options:
Use Assigned Model (Default)
Use the current model assignments as shown in the Assigned Model column.
Choose a Model
Use a different model for this rebalance while still maintaining the portfolio's existing model assignment.
- To look up a model, select the magnifying glass. (Model Lookup)
- You can only choose from models to which you have access.
Note
If you chose Liquidate Account, Model Options do not apply.
(Optional) To indicate the minimum to remain in Core Cash after running the rebalance:
- From Cash Options, choose a quantity type: Percent or Dollars.
- In the MCCAR field, enter the cash target in the chosen quantity type.
- A message prompts you to confirm the value.
- Select Change MCCAR.
- If Percent, the target can be up to 100% of the account's market value.
- The MCCAR dollar amount cannot exceed the market value.
- If a STANDARD rebalance, the target applies per account.
- If a HOUSEHOLD rebalance, the target applies to the entire household.
Note
If you chose Liquidate Account, Cash Options and MCCAR do not apply.
If you chose Generate Cash, enter the amount of cash to generate, if needed:
- From Cash Options, choose a quantity type: Percent or Dollars.
- In Cash to Generate, enter the amount in the chosen quantity type.
- A message prompts you to confirm the amount.
- Select Change CTG.
- If a STANDARD rebalance, the amount applies per account.
- If a HOUSEHOLD rebalance, the amount applies to the entire household.
(If entitled) Choose an Access Type:
Public
Use of this rebalance is unlimited to users at your firm.
Private
Use of this rebalance is limited to you or another member of your firm.
To disregard the account's unsettled cash debit or credit activity from the rebalance, clear one or both check boxes:
Cash Debits
Select this to decrease Net Cash by the amount in the Cash Debits column.
Cash Credits
Select this to increase Net Cash by the amount in the Cash Credits column.
By default, the rebalance includes these balances in its calculations. Including these balances influences the outcome of net cash in an account. As a best practice, monitor an account's cash available to trade.
Note
If you chose Liquidate Account, leave Cash Debits and Cash Credits selected.
View current position details and possible drift prior to running a rebalance. Depending on the rebalance type, these details display either at the account-level or, if entitled, the household-level. You will recognize this information as the same as on the Ad-hoc Drift Report, which helps you to identify positions no longer aligned with tolerance ranges defined in the model. Information includes a drift analysis of holdings by cash and securities.
To view drift
On the Accounts tab, in the More Info column, select Open Details.
Interact with the Chart
- Cash and securities are labeled on the x-axis.
- Actual and target percentages are labeled on the y-axis.
- Hover over a security to view its Target and Initial percentages.
- Target refers to proposed holdings; Initial refers to current holdings.
Determine Drift in the Table
- View drift by security ID.
- Right arrow indicates position is above target specified by model.
- Left arrow indicates position is below target specified by model.
- No arrow indicates position is at the target (no drift).
If a HOUSEHOLD rebalance, a section displays for each account within the household.
- Select an arrow to expand an account's information.
In the upper left corner of these rebalance details, select x to return to the Accounts tab.
This step is optional.
Settings on the Preferences tab reflect the personalization you established on the Rebalancing Preferences window. You can change the settings here as they relate to the rebalance you are creating – thereby establishing settings specific to the rebalance. Your changes on the Preferences tab for the current rebalance do not impact your global settings on the Rebalancing Preferences window. (Establish Rebalancing Preferences)
To edit preferences for the current rebalance
Select the Preferences tab.
Enter changes to the rebalancing preferences. (Field Definitions)
- Changes to preferences here apply to the current rebalance only.
Go to: Run the Rebalance
Run the rebalance now or save the rebalance to run later.
To save the rebalance for later, select Save. (Filter the List of Rebalances)
To share the rebalance with other users at your firm, if entitled, select Save & Share. (Share a Rebalance)
To run the rebalance now, select Save & Rebalance. (View Rebalance Results)
You may edit a rebalance that you created.
Although you are not limited to the types of edits you can enter, changing the Rebalance Type or Rebalance To (objective) are considered major modifications that may impact the overall results of a rebalance. To change the Rebalance Type or its objective, it is recommended that you create a new rebalance instead.
Since editing is similar to creating a rebalance, to learn more, go to:
Choose the data to display by adding, removing, and arranging columns. Your column customizations remain persistent from session to session.
- A column that displays "fixed" cannot be removed or rearranged.
Above the table, select the Customize (gear) icon.
To add a column, from the Available Columns list:
- Select the column name.
- Select Add.
To remove a column, from the Selected Columns list:
- Select the column name.
- Select Remove.
To change the order of a column, from the Selected Columns list:
- Select the column name.
- Select Move Up or Move Down.
Select Save.
- Accounts Tab
- Preferences Tab
| Field | Definition |
|---|---|
| Account Source | The source of the account information: Fidelity Brokerage
|
| Assigned Model | The name of the model assigned to the account, if applicable. Note
|
| Assignment | Indicates whether the client and/or account belongs to a household: -- (Double dashes) No
|
| Cash Credits/Debits | The credit or debit amount in the cash account (type 1). |
| Cash to Generate | For Generate Cash only
The designated amount of cash to generate from the rebalance. |
| Clients, Groups, Accounts | The client, group, or account(s) selected for the rebalance. Note
|
| Core Cash | The cash credit balance held in the core money market account, if applicable. |
| Core Target | The target of the cash component in the model, if applicable. |
| Custom Short Name | The user-defined short name for the account. |
| Default Cost Basis Disposal Method | The cost basis disposal method designated for the account. This reflects the account's default method to choose lots to sell when a method is not specified at order entry. (Cost Basis Disposal Methods) |
| FBSI Short Name | The Fidelity-defined short name for the account. Note
|
| Market Value | The current market value of all securities and cash in the account. |
| MCCAR | (Minimum Core Cash After Rebalance) The minimum amount of cash requested to remain in the account after running the rebalance, if applicable. (MCCAR) |
| Net Cash | The dollar amount available to purchase securities in the cash account. Net Cash = Core Cash + Cash Credits
|
| Primary Account Owner | The name of the primary account holder of the account, in last name, first name format. |
| Registration | The registration of the account. |
| Tax Status | The tax filing status of the primary account holder: Taxable
|
| YTD Long Term Net Gain/Loss | For orders in taxable accounts, this is the year to date taxable realized long term gain or loss for the account. |
| YTD Short Term Net Gain/Loss | For orders in taxable accounts, this is the year to date taxable realized short term gain or loss for the account. |
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