Drift Tolerance Bands Introduced to Strategist Models

Effective July 27th, Orion Portfolio Solutions will begin to implement drift tolerance bands on all strategist model portfolios. The initiative is designed to deliver multiple benefits to advisors and their clients, including:

• Lowering trade volumes through the reduction of small trades to bring model allocations back to target
• Limiting capital gains that occur through rebalancing

The default drift tolerance for all positions will be +/- 3 percent. For example, a position with a 10% allocation could drift to 7% or 13% before being traded back to tolerance in a rebalance. For positions at or under 3%, the drift tolerance will be set at half the position’s weighting. This will allow a 3% position to drift between 1.5% and 4.5% before triggering a rebalance.

Please be aware that adding the tolerance bands will not proactively trigger a rebalance within strategist model portfolios. This will only adjust the trading practices implemented to complete requested rebalances. Strategists will maintain full control of their model portfolios.

For more information, please contact your Orion Portfolio Solutions Regional Sales Team at 800.379.2513 option 1.