Smart Buys

How this works

As you add money to your basket, your most underweight securities are identified, and proposed trades are allocated to those first. Any remaining money is allocated across all positions based on targets.

Example:

You have a basket with 4 positions. 2 positions are currently underweight.

This image shows the symbol, name, target weight, and drift from target for each position. Target weights are 25% for each position, and the drifts are 10%, 5%, -5%, and -10%.

Want to bring this basket back to its target weights? Choose an investment amount.

Adding $150 to this hypothetical basket proposes to allocate funds only to the 2 most underweight positions.

This image shows the same 4 positions with target weights at 25%. The drifts, starting with the 1st position, are now 5%, 1%, -3%, and -4% following the addition of $150 to your basket. $58 has been added to the 3rd position and $92 to the 4th.

Adding $300 proposes to allocate the funds more broadly, bringing the basket even closer to its targets.

This image shows the same 4 positions with target weights at 25%. The drifts, starting with the 1st position, are now 2%, 0%, -1%, and -1% following the addition of $300. $23 has been added to the 2nd position, $115 to the 3rd, and $162 to the 4th.

Adding $500 proposes to allocate the funds proportionally across all 4 positions, bringing the basket fully into balance.

This image shows the same 4 positions with target weights at 25%. There is now 0% drift following the addition of $500. $25 has been added to the 1st position, $75 to the 2nd, $175 to the 3rd, and $225 to the 4th.

Why use Smart Buys

With Smart Buys you can invest in your basket and maintain your targets without any manual calculations. It is also a tax-efficient option to get your taxable-account baskets closer to your targets by buying more of the underweight securities.