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Allocation Preference
Choose how you'd like to allocate holdings among the accounts in the group. This setting determines how your asset location preference label priorities and model priorities are applied during a rebalance.
Asset location preference labels can be thought of as a set of priorities; these priorities, as well as model priorities, are established on the Asset Location page. For more information, see Learn More About Asset Location and Priorities.
These options are available:
This option is recommended as it is the most conservative application of asset location priorities in terms of the number of trades that Tamarac Trading will recommend.
This option reallocates securities based on the most favorable model priorities and asset location preference labels you set. Allocates securities at the Security Level model level using the following logic:
Tamarac Trading looks for all Security Level models that are above the group's goal percentage.
Overweight Security Level models are sold down to the group's goal, starting with selling the least preferred model priority in the least preferred asset location preference label.
Available cash and cash generated from the sells is used to purchase securities in underweight Security Level models, starting with the most favorable model priority in the most preferred asset location preference label.
This option bypasses any asset location preferences you've set and strictly applies the model to each account in the group by reallocating each account to match the account's model.
For example, the Smith family opens trust accounts for three children and each account is the same value. You place these accounts in a group enabled for rebalancing and give the group the Allocate as Individual Accounts preference. This way, allocation of securities is equal in each of the three trust accounts for the children.
This option fully reallocates each account to match preferences and model priorities and, during a rebalance, treats the entire group as if it's cash. This option produces the most number of trades and is the most aggressive option.
Securities are allocated using the following logic:
Tamarac Trading reallocates each account in the group to asset location preference priorities.
Assets not held in accounts with the preferred asset location preference label are moved to the account with the highest priority asset location preference label.
This option is not recommended for most firms.
This option reallocates based primarily on asset location preference labels. If an account within the group holds a Security Level model that is not overweight and, by established asset location priorities, is in the correct account type, the position will remain in that account.
If an account within the group holds a Security Level model that, by established asset location priorities, should be held by an account with a different asset location preference label, Tamarac Trading reallocates securities using the following logic:
Tamarac Trading recommends a sell from that Security Level model and a buy into an account with the preferred asset location preference label.
Any remaining overweight Security Level models are sold down to their model goals.
Available cash and cash generated from the sells is used to purchase securities in underweight Security Level models, starting with the most favorable models in accounts with the most preferred asset location preference labels.