Rebalancing Engine
Continuous drift detection, tax-optimized lot selection, and minimum-order sequencing. Configurable per portfolio — set your drift threshold and the engine handles the rest.
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When to rebalance — and when not to
Constant rebalancing generates unnecessary transaction costs and tax events. Too-loose thresholds let portfolios drift far from target, eroding the risk profile clients paid for.
The engine monitors portfolio weights continuously against your configured thresholds. When any position drifts beyond the band — up or down — it calculates the minimum set of trades to return to target, accounting for transaction costs and tax impact.
Thresholds are configurable per portfolio: a 5% absolute band for equity portfolios, a 2% band for fixed income, or a relative band of 20% of target weight. Your configuration, our infrastructure.
FIFO vs HIFO: choosing the right method
Tax lot selection can meaningfully reduce the taxable gain on a rebalancing event. The engine applies your configured method per account type.
| Method | How it works | Best for | Supported jurisdictions |
|---|---|---|---|
| FIFO — First In, First Out | Sells oldest lots first. Typically realizes the lowest-cost basis lots, maximizing taxable gain. | Long-term investors; required in Germany (§20 EStG), Netherlands | DE, NL, AT, BE |
| HIFO — Highest In, First Out | Sells highest-cost basis lots first. Minimizes realized gain on a given sale. | Active rebalancing where minimizing current-year tax drag is priority | GB, IE, FR (PEA), SE |
| Average Cost | Uses weighted average cost across all lots. Simpler tracking for fund-wrapped accounts. | Pension accounts, unit trust wrappers | GB (pension), IE, DK |
| Specific ID | You specify the exact lot to sell via API. Full control, maximum flexibility. | Complex portfolios with external tax optimization logic | All |