How to Use Asset Classes Models?
Your model portfolios can either be composed of individual securities, or of asset classes. In this tutorial, we will explain what asset classes are, and how to use them to build and manage your portfolio(s).
What Is an Asset Class
In general, an asset class is a group of assets that have characteristics in common and are treated similarly. For example, bonds or stocks are generally considered as asset classes.
In Passiv, an asset class is a group of assets that count towards the same percentage allocation. For maximum flexibility, Passiv users can define their own asset classes and assign securities to them. You can then build your model portfolio allocations based on these asset classes you’ve created.
Once you apply an asset class model to a portfolio, you'll be prompted to prioritize assets within a class, choose in which account an asset class gets bought in, and ban assets from being traded in a given account. For now, users can prioritize buying only one asset per class.
How to Create an Asset Class Model
In My Models, click on New Model.
Click Edit Name and choose a name for your model, then click Done.
In Model Type, select Asset Class, click OK.
In the Asset Class box, click on Add Asset Classes.
Click on +New Asset Class.
Click Edit Name and choose a name for your asset class, then click Done.
Add your securities to your asset class.
Repeat these steps to add more asset classes. When you're done, click on Back to Model Portfolio.
You can now build your model with your asset classes. Click Edit Model.
Add your asset classes and assign a percentage allocation to each of them. When you're done, click Save Changes.
How to Apply* an Asset Class Model to a Portfolio
In My Models, click Apply on the asset class model you'd like to use.
Choose the portfolio to apply your model to.
You have to define priorities for which assets will be bought and sold in each account.
Click on the arrow to expand the asset class box.
You can choose one security to be bought in each account. Click on the arrows to move it to the top priority into the Buy box.
The other securities in the asset class will not be bought, but will count towards the asset class allocation. If Sell is enabled, the securities will be sold from the bottom up. If you don't choose a Buy priority, Passiv will not make suggestions for buys for this asset class.
You can prevent a security from being traded (buy and sell) in an account by checking the Do Not Trade box.
When you're done choosing priorities for an asset class, click Confirm Priorities.
Repeat this process for each of your asset classes, then click Save.
If you add/delete a security in an asset class, add a new asset class to a model, or add an account to your portfolio, a message will prompt you to confirm your priorities in your portfolio Overview page. Click Take me to Priorities or scroll down to the bottom of your Portfolio Settings page to edit your priorities.
If you have any securities that are in your accounts and aren’t associated with any asset class, you will need to exclude them. If you don't, they could affect your portfolio groups accuracy and be sold (if you have selling enabled).
Under Portfolio Settings, click on the Exclude toggle left of the security.
*At the moment, if you need to edit a model portfolio that is applied to more than one portfolio group, you’ll need to create a new model, or duplicate an existing one, and apply it to the group.