If you hold your investments with Clearwater via the Transact or Standard Life Platforms and your portfolios are managed by Evidence Based Investments (EBI), you may have been wondering about some recent transactions on your account. These transactions, initiated by EBI, are as a result of a periodic rebalance; there are no charges associated with the rebalance.
You may recall that previous rebalances were carried out on an annual or ad hoc basis and your permission would have been sought, as part of this process. With the new Vantage Portfolios EBI have the discretion to conduct such rebalances without prior reference to the clients and that is what has happened on this occasion. In addition, EBI now conduct rebalances only when individual funds breach certain thresholds, this maximises efficiency and reduces unnecessary trading.
The following has been taken from the recent communication from EBI to us, explaining the rationale for the rebalance:
“EBI monitors the drift of all assets within the model portfolios and as of today, the Emerging Markets element of our Earth Portfolio range has drifted away from its initial target to breach the set tolerance limit. It is therefore important we carry out a rebalance to bring the portfolios closer towards their target asset allocation and ensure the risk profile is maintained.”
Rebalancing is not carried out to obtain any performance advantage, although this can happen, it is to ensure that portfolios remain within the agreed risk parameters.
As a number of clients have queried these unexpected transactions, Adam and I have decided to notify everyone in advance next time.
I do hope the above makes sense but, as always, if you have any concerns about your own financial arrangements or would like to discuss whether you are truly making the most of your money, please do not hesitate to call me.
With kind regards,
Yours sincerely
Graham Ponting CFP Chartered FCSI
Managing Partner
