At WealthDesk, we aim to make portfolio investing as easy as possible. WealthBaskets allow investors to invest in portfolios of stocks and ETFs based on a theme, sector or idea. The core difference from many other investment products like mutual funds is that investors get to own the stocks and ETFs. These securities lie in the demat account of investors.
As WealthBaskets enable the investors to own the underlying stocks and ETFs, they may sell some part of it directly via their broker.
But what happens when there is a rebalancing? How would the WealthBasket Managers give rebalancing updates in such cases?
This is where WealthDesk’s Auto Reconciliation feature comes into play. Let us first see how rebalancing works before we dive into the Auto Reconciliation feature.
The Rebalancing process
In simple words, the WealthBasket Managers rebalance the WealthBaskets so that it remains true to its underlying strategy or it remains aligned with the WealthBasket Manager’s research. This process generally involves selling some and buying some securities by the user at their discretion.
The frequency of rebalancing is based on the WealthBasket Managers. If they feel the WealthBaskets do not need rebalancing, then a rebalancing will not happen.
The investor has the final decision on deciding whether they want to rebalance their portfolio or not. It is recommended to follow the rebalancing updates so that the WealthBaskets remains true to its strategy or research report.
Generally, the rebalancing updates are issued based on the last combination of stocks and ETFs in the WealthBasket.
But what if the investor sold some of the securities directly through their Broking account? What happens in this case?
The Auto Reconciliation Feature
Even if the investor decides to directly sell some part of the WealthBaskets via their broker, WealthDesk’s Auto Reconciliation feature will take care of updates for rebalancing in future.
At the end of each trading day, WealthDesk reconciles the investors’ holdings with the actual holdings of the invested WealthBaskets. If a change is noted (e.g. some stocks sold), we update the WealthBasket holdings of the investors. The reconciliation is done at the Broker’s end through an automated end of day process which has a defined rule based engine to handle this.
WealthDesk Platform algorithms can then ensure the next rebalancing update by the WealthBasket Manager is based on the investors’ existing holdings of invested WealthBaskets..
This feature will ensure that no sell orders are issued for securities which are not part of the investors’ WealthBasket holdings.
The Auto Reconciliation is done automatically for the Broker WealthDesk Platform at the Broker end so that their Investors have a seamless experience.
The Auto Reconciliation feature is only available when WealthDesk is available from inside the broker’s application. The feature has been created to make it easy for investors, WealthBasket Managers and broking operations.
To make portfolio investing easier than ever before, WealthDesk continuously works on new features.
The Auto Reconciliation feature will make investing in WealthBaskets and rebalancing them a delightful experience. The investors, WealthBasket Managers and Brokers stand to gain from this feature.
The feature will enable the investor to get accurate rebalancing updates as per their holdings. The WealthBasket Manager does not have to reconcile the investors’ holdings manually. If WealthDesk is deeply integrated as a B2B2C play with the Broker, Auto Reconciliation makes it a seamless experience and brings value proposition from an investor point of view.