Floating Allocation – How It Works in Fincanva

What It Is

Floating allocation allows capital weights to evolve naturally over time without resetting them at each rebalance. It reflects the reality of portfolio drift—where allocations shift as assets grow or shrink in value—while maintaining a structured starting point.

What It Does in Fincanva

• Logic: Floating starts by assigning initial weights (using either Equal Weights or Risk Scaling), but then allows them to drift based on asset or model performance.

• Simulation Behavior: At each rebalance, only new positions are assigned fresh weights. Existing positions retain their weight proportions unless trimmed or replaced.

• Starting Parameters: Users can choose Equal Weights or Risk Scaling as the base method for initial allocation.

Pros

• Reduces transaction costs by minimizing unnecessary rebalancing

• Reflects real-world investor behavior and natural portfolio drift

• Preserves relative performance-driven allocations over time

• Allows momentum and growth dynamics to influence the portfolio organically

Cons

• Weights can become concentrated if some positions grow significantly

• May deviate from your initial strategy or risk profile

• Requires monitoring to prevent unintentional overexposure

• Less control over asset contribution if left unmanaged for long periods

Where You Can Use It

• Portfolios: Not available

• Models: Yes

When to Use It

• Best for long-term investors seeking to minimize trading frequency

• Useful when aiming to let strong performers grow without interruption

• Suitable when you want to reflect organic changes in position sizes

• A great fit for tax-conscious strategies or low-turnover mandates

Example
Suppose you start a model with Equal Weights (25% each across 4 assets). Over time, one asset gains 30% while another drops 10%. Instead of resetting to 25% each at the next rebalance, Floating lets the larger position grow, adjusting only for newly added or removed assets.

• Portfolios: Not available

• Models: Available on Advanced, Ultimate, and Professional plans