Overview
The SMArtX Exclusions and Substitutions functionality provides a customized way to instruct the platform on how to handle situations where an advisor needs to prevent or replace a security from being held in a client account.
Creating An Exclusion
Exclusions are account level instructions and will apply to any and all sleeves within an account.
In Basic Mode, entering an account number and symbol will implement an exclusion that will liquidate the specified symbol and reallocate the value to the rest of the portfolio
It is recommended to enter Advanced Mode when entering an exclusion (details below on Advanced Mode)
Unless the entry is future dated, an exclusion gets implemented upon submission
Where an excluded position is in the Managed Portfolio, implementing the exclusion will require a rebalance to be submitted by the advisor
Ending an Exclusion requires an End Date to be entered at the initial creation (can also be added at a later time) along with selecting an instruction on how the platform should behave upon expiration
Upon expiring an exclusion, reversing the exclusion of a Managed Portfolio position will require a rebalance to be submitted by the advisor
Creating a Substitution
Substitutions are account level instructions and will apply to any and all sleeves within an account
In Basic Mode, a substitution will fully liquidate the original position and invest in the substituted symbol
It is recommended to enter Advanced Mode when entering a substitution (Advanced Mode details are below)
Unless the entry is future dated, a substitution gets implemented upon submission
Where a substituted position is in the Managed Portfolio, implementing the exclusion will require a rebalance to be submitted
Ending a Substitution requires an End Date to be entered at the initial creation (can also be added at a later time) along with selecting an instruction on how the platform should behave upon expiration
Upon expiring an exclusion, reversing the exclusion of a Managed Portfolio position will also require a rebalance to be submitted
Using Advanced Mode
When entering a substitution or exclusion, it is ALWAYS RECOMMENDED to create the entry leveraging the Advanced Mode setting which will display all available options to the user
By using Advanced Mode for an Exclusion/Substitution, the advisor is able to make the following selections as part of the entry:
As a Replacement for this Security - The instruction of how the platform should behave in place of the original security being excluded
Hold Cash - When entering an Exclusion, the platform will hold an equal dollar value of Cash in the portfolio as the substituted symbol
Reallocate to the rest of the portfolio - When entering an Exclusion, the platform will liquidate the Excluded security and apply the dollar value of Cash to the other holdings in the portfolio per the model weights
Enter a Stock Symbol - When entering a Substitution, the Advisor is able to select a replacement security that will be held in lieu of the original symbol and at an equivalent value
I Want To - The instruction of how the platform should behave with the original symbol being excluded
Liquidate Existing Shares Immediately - When selected, this will liquidate any shares of the selected security and enact a “do not buy” exclusion on the account
Hold Existing Shares - When selected, this will freeze the selected security and enact a “do not buy, do not sell” exclusion on the account
Liquidate Existing Shares as Needed - When selected, this will enact a “do not buy, sell as needed” exclusion on the account
Start Date - When the advisor wants this to begin being implemented which may be future dated if required
End Date - When the advisor wants this instruction to expire (not required if the advisor wants the exclusion/substitution to remain in place)
Reversing Exclusions and Substitutions
When entering an exclusion or substitution, advisors have the option of selecting an end date and the behavior desired to be taken upon expiration
If an end date is not added at inception, the advisor is always able to add an end date to an existing exclusion or substitution
If no end date is specified on the entry, the Advisor can delete an exclusion/substitution and the platform will follow its standard operating procedures for trading
Expiration behavior when an excluded/substituted position is in a model sleeve (or sleeves)
If the model is still holding the original symbol, upon expiration, the platform will bring the allocation in line with the manager’s model without consideration of the expired exclusion/substitution
If the model is no longer holding the original symbol, upon expiration, the platform will bring the allocation in line with the manager’s model without consideration of the expired exclusion/substitution
Expiration behavior when an excluded/substituted position is in the Managed Portfolio sleeve
The Advisor will need to trigger and submit a rebalance to implement the unwinding trades of an expired exclusion/substitution