We're excited to announce an upgrade to our Folios feature. In addition to the existing quarterly strategy, users can now choose to rebalance their Folios annually or select a buy-and-hold strategy without rebalancing. These new options offer greater flexibility and potential tax advantages.
What are Folios?
Folios are customizable baskets of 3-50 stocks, allocated according to one of two weighting strategies—market cap weighting and equal weighting. OPTO helps you maintain your Folio strategy by automatically rebalancing according to your preferred cadence, ensuring your investments stay on track for the long term.
Introducing New Rebalancing Strategies
Until now, Folios offered automatic Quarterly rebalancing—aligning investments with institutional best practice by rebalancing your portfolio every financial quarter (March, June, September, and December). To provide greater flexibility and potential tax advantages, we're introducing two additional options:
1. Annual Rebalancing
Automatically rebalance your Folio once per year, timed one year after your most recent purchase. This cadence can provide meaningful tax efficiency by reducing the frequency of trades, potentially minimizing short-term capital gains taxes.
2. Buy-and-Hold
No automatic rebalancing—ideal for long-term investors who prefer minimal intervention. You have full control to manually rebalance whenever you choose, enabling you to optimize your tax strategy further and maintain investments without triggering unnecessary tax liabilities.
Why These New Options Matter
Rebalancing is the practice of shifting, or reallocating, a portfolio’s investments in an effort to maintain an appropriate blend of stocks that aligns with your long-term strategy. Studies have shown that, over the long-term, a portfolio that was never rebalanced had 16% more annualized volatility and no additional return benefits, than a rebalanced portfolio.* However, frequent rebalancing—like our Quarterly strategy—may lead to increased tax exposure from short-term capital gains.
With the addition of Annual and Buy-and-Hold strategies, OPTO investors now have enhanced flexibility to balance portfolio alignment with potential tax efficiencies. Annual rebalancing reduces trade frequency, potentially lowering tax exposure. The Buy-and-Hold approach provides maximum control, letting you make strategic adjustments manually at the most advantageous times for your tax situation—without automatic rebalancing.
Easily Manage Your Rebalancing Strategy
You can easily switch your chosen rebalancing strategy at any time within your Folio settings. Whether you prefer the discipline of scheduled Quarterly rebalancing, the balanced approach of Annual updates, or the total control of Buy-and-Hold, OPTO empowers you to align your investments precisely to your personal goals and tax considerations.
Explore the new Rebalancing Strategies today by building you first Folio.
* https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/PAS_rebalancing-portfolio.pdf
The content of this article is for general information only and is believed to be accurate as of posting date but may be subject to change. All examples are for illustrative purposes only and should not be interpreted as investment advice. Opto Markets nor our broker-dealer Alpaca do not provide investment, tax, or legal advice. Please consult your own independent advisor as to any investment, tax, or legal statements made herein. Opto Markets LLC is not a broker-dealer, investment adviser, nor a member of the Financial Industry Regulatory Authority (FINRA). Securities are offered by Alpaca Securities LLC (“Alpaca Securities”). Alpaca Securities is a broker-dealer regulated by the Securities and Exchange Commission (SEC), a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC).
Opto Markets LLC is not an investment advisor and nothing herein or mentioned on any other Opto channel should be construed as investment advice. The content on this website, on our app and on any other Opto channel is provided for informational, educational and entertainment purposes only. Opto Markets LLC does not recommend any specific securities or investment strategies. Investing involves risk & investments may lose value, including the loss of principal. Past performance does not guarantee and is not an indicator of future results. Investors should consider their investment objectives and risks carefully before investing. Please seek the advice of an investment or financial advisor, and do not apply any of the generalized material available herein or on other Opto channels to your individual facts or circumstances without speaking to an investment or financial advisor.
Disclaimer Past performance is not a reliable indicator of future results.
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.
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