Method and apparatus for managing a virtual portfolio of investment objects

• US 20070055599A1
• Filed: 08/24/2006
• Published: 03/08/2007
• Est. Priority Date: 04/10/2002
• Status: Active Grant

• Current Assignee: Research Affiliates LLC (Research Affiliates Global Holdings LLC)
• Original Assignee: Research Affiliates LLC (Research Affiliates Global Holdings LLC)
• Inventors: Arnott, Robert
• Granted Patent: US 7,587,352 B2
• Time in Patent Office: Days
• US Class Current: 705/35
• CPC Class Codes: G06Q 10/063 Operations research, analysis or management
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: G06Q 40/10 Tax strategies

Abstract

A method and apparatus system for managing virtual mutual funds. A plurality of investment managers manage a plurality of accounts for a plurality of investors. The investors directly hold assets in the accounts so that the investors may take advantage of any tax benefits generated by transactions using the assets in the accounts. An investor may have one or more accounts and thus one or more managers. A manager may have one or more investors and thus one or more accounts to manage. A virtual mutual fund manager uses a holdings matrix and a lot matrix to track the asset lots in the accounts. When a manager wishes to make a trade affecting an investor, the virtual mutual fund manager determines which asset lots held by the investor should be used to execute the trade. Optionally, each investor may be associated with a tax-managed account. The tax-managed account is used by the virtual fund manager to make deferred “paper” trades thereby avoiding certain adverse tax consequences that may be created when an investor has multiple managers. Optionally, each investor may allow loss-harvesting trades to be executed on his or her behalf in circumstances where such trades may reduce the investor'"'"'s tax obligations.

Claims

1. A method of managing one or more financial objects, the method being executed on a data processing system, the method comprising:

managing a virtual portfolio of the financial objects wherein said virtual portfolio comprises a collection of the financial objects managed collectively but tracked separately with separately owned lots on behalf of a plurality of investors;

providing a computer database associating a plurality of lots owned by each of said plurality of investors and associating said plurality of lots as tradable regardless of initiator of the purchase of said plurality of lots;

providing lot selection rules;

receiving a requested trade;

selecting a lot for trading from said plurality of lots using said computer database, said lot selection rules, and said requested trade;

providing taxation rules;

determining if a trade using said selected lot should be deferred using the computer database and said taxation rules;

generating a deferred trade in a tax-managed sub-account if it is determined that said requested trade should be deferred; and

selecting said deferred trade in said tax-managed sub-account for execution if it is determined that said deferred trade should no longer be deferred using said computer database and said taxation rules.

2. The method of claim 1, wherein said lot selection rules include a rule for selecting a lot with a highest cost basis for trading.

3. The method of claim 1, wherein the financial object comprises at least one of:

equity, debt, a bond, a stock, a financial instrument, a contract, a security, a contract, a mutual fund, an exchange traded fund (ETF), a fund of funds, an index fund, a passive index fund, an actively managed fund, a non-capitalization weighted index fund, a capitalization weighted index fund, an equal weighted indexed fund, an international fund, a sector fund, an asset, a liability, an accounting data based index (ADBI) fund, a portfolio of assets tracking an index, a portfolio of assets tracking S&

P indexes, Russell indexes, Dow Jones indexes, Morgan Stanley indexes, Lehman indexes, Wilshire indexes, composite indexes, Morgan Stanley Capital International indexes, a portfolio of assets tracking an ADBI weighted index, a commodity, an option, a derivative trade, a long hedge, a short hedge, a swap, a futures contract, a hedge fund, and/or a negative weighting on any financial object.

4. The method of claim 1, wherein said lot selection rules comprise investment management rules.

5. The method of claim 1, further comprising:

receiving a plurality of requested trades;

selecting a plurality of lots for trade execution; and

aggregating any executed trades for reconciliation.

29. The method according to claim 1, wherein said plurality of lots comprises at least one of:

one or more financial objects,

wherein the financial object comprises at least one of;

equity, debt, a bond, a stock, a financial instrument, a contract, a security, a contract, a mutual fund, an exchange traded fund (ETF), a fund of funds, an index fund, a passive index fund, an actively managed fund, a non-capitalization weighted index fund, a capitalization weighted index fund, an equal weighted indexed fund, an international fund, a sector fund, an asset, a liability, an accounting data based index (ADBI) fund, a portfolio of assets tracking an index, a portfolio of assets tracking S&

P indexes, Russell indexes, Dow Jones indexes, Morgan Stanley indexes, Lehman indexes, Wilshire indexes, composite indexes, Morgan Stanley Capital International indexes, a portfolio of assets tracking an ADBI weighted index, a commodity, an option, a derivative trade, a long hedge, a short hedge, a swap, a futures contract, a hedge fund, and/or a negative weighting on any financial object;

a plurality of securities; and

/or

a group of financial objects and/or securities.

46. The method of claim 1, wherein said financial object comprises:

at least one unit of interest in at least one of;

an asset;

a liability;

a tracking portfolio;

a financial instrument and/or a security, wherein said financial instrument and/or said security denotes a debt, an equity interest, and/or a hybrid;

a derivatives contract, including at least one of;

a future, a forward, a put, a call, an option, a swap, and/or any other transaction relating to a fluctuation of an underlying asset, notwithstanding the prevailing value of the contract, and notwithstanding whether such contract, for purposes of accounting, is considered an asset or liability;

a fund; and

/or

an investment entity or account of any kind, including an interest in, or rights relating to;

a hedge fund, an exchange traded fund (ETF), a fund of funds, a mutual fund, a closed end fund, an investment vehicle, and/or any other pooled and/or separately managed investments.

50. The method of claim 1, wherein said plurality of lots comprises at least one of one or more financial objects, wherein said financial object comprises:

at least one unit of interest in at least one of;

an asset;

a liability;

a tracking portfolio;

a financial instrument and/or a security, wherein said financial instrument and/or said security denotes a debt, an equity interest, and/or a hybrid;

a derivatives contract, including at least one of;

a future, a forward, a put, a call, an option, a swap, and/or any other transaction relating to a fluctuation of an underlying asset, notwithstanding the prevailing value of the contract, and notwithstanding whether such contract, for purposes of accounting, is considered an asset or liability;

a fund; and

/or

an investment entity or account of any kind, including an interest in, or rights relating to;

a hedge fund, an exchange traded fund (ETF), a fund of funds, a mutual fund, a closed end fund, an investment vehicle, and/or any other pooled and/or separately managed investments.

6. A method of managing one or more financial objects comprising:

managing a plurality of virtual portfolios of the financial objects with separate lots owned by one or more individual investors and tracked separately;

providing a computer-implemented lot matrix associating a plurality of lots with said plurality of virtual portfolios of the financial objects, each lot of said plurality of lots tradable regardless of initiator of purchase of said lot and associating said plurality of lots as separately owned by said one or more investors;

providing lot selection rules;

receiving a requested trade;

for each of said plurality of virtual portfolios, performing the following;

for said requested trade, selecting a lot from said plurality of lots for execution of said requested trade using said lot selection rules, and said lot matrix;

determining if said requested trade should be deferred using said lot matrix, taxation rules, and said lot selection rules;

generating a deferred trade in a tax-managed sub-account if it is determined that the requested trade should be deferred; and

selecting said deferred trade in said tax-managed sub-account for execution if it is determined that said deferred trade should no longer be deferred using said lot matrix and said taxation rules.

7. The method of claim 6, wherein the financial object comprises at least one of:

equity, debt, a bond, a stock, a financial instrument, a contract, a security, a contract, a mutual fund, an exchange traded fund (ETF), a fund of funds, an index fund, a passive index fund, an actively managed fund, a non-capitalization weighted index fund, a capitalization weighted index fund, an equal weighted indexed fund, an international fund, a sector fund, an asset, a liability, an accounting data based index (ADBI) fund, a portfolio of assets tracking an index, a portfolio of assets tracking S&

P indexes, Russell indexes, Dow Jones indexes, Morgan Stanley indexes, Lehman indexes, Wilshire indexes, composite indexes, Morgan Stanley Capital International indexes, a portfolio of assets tracking an ADBI weighted index, a commodity, an option, a derivative trade, a long hedge, a short hedge, a swap, a futures contract, a hedge fund, and/or a negative weighting on any financial object.

8. The method of claim 6, wherein said lot selection rules comprise investment management rules.

9. The method of claim 6, further comprising:

generating trades for execution from selected lot; and

aggregating generated trades for a virtual portfolio of said plurality of virtual portfolios.

10. The method of claim 6, further comprising aggregating tax savings across said plurality of virtual portfolios for each of said one or more individual investors.

27. The method of claim 6, further comprising:

providing a holdings matrix associating one or more managers with said plurality of virtual portfolios; and

wherein in said selecting said lot for execution of said requested trade, further comprising using said holdings matrix.

28. The method of claim 6, wherein said lot selection rules comprise a rule for selecting a lot with a highest cost basis for trading.

47. The method of claim 6, wherein said financial object comprises:

at least one unit of interest in at least one of;

an asset;

a liability;

a tracking portfolio;

a financial instrument and/or a security, wherein said financial instrument and/or said security denotes a debt, an equity interest, and/or a hybrid;

a derivatives contract, including at least one of;

a future, a forward, a put, a call, an option, a swap, and/or any other transaction relating to a fluctuation of an underlying asset, notwithstanding the prevailing value of the contract, and notwithstanding whether such contract, for purposes of accounting, is considered an asset or liability;

a fund; and

/or

an investment entity or account of any kind, including an interest in, or rights relating to;

a hedge fund, an exchange traded fund (ETF), a fund of funds, a mutual fund, a closed end fund, an investment vehicle, and/or any other pooled and/or separately managed investments.

11. A data processing system for managing one or more financial objects comprising:

a virtual portfolio of the financial objects wherein said virtual portfolio comprises a collection of the financial objects managed collectively but tracked separately with separately owned lots on behalf of a plurality of investors;

a computer database adapted to associate a plurality of lots of said plurality of investors and adapted to associate said plurality of lots as tradable regardless of initiator of the purchase of one of said plurality of lots;

a processor; and

a memory coupled to said processor and having program instructions stored therein, said processor being operable to execute said program instructions, said program instructions including;

lot selection rules;

instructions being adapted to receive a requested trade; and

adapted to select a lot for trading from said plurality of lots using said computer database, said lot selection rules, and said requested trade;

taxation rules;

instructions being adapted to determine if a trade using said selected lot should be deferred using said computer database and said taxation rules; and

adapted to generate a deferred trade in a tax-managed sub-account if it is determined that said requested trade should be deferred; and

instructions being adapted to select a deferred trade in said tax-managed sub-account for execution if it is determined that said deferred trade should no longer be deferred using said computer database and said taxation rules.

12. The data processing system of claim 11, wherein said lot selection rules include a rule adapted to select a lot with a highest cost basis for trading.

13. The system of claim 11, wherein the financial object comprises at least one of:

equity, debt, a bond, a stock, a financial instrument, a contract, a security, a contract, a mutual fund, an exchange traded fund (ETF), a fund of funds, an index fund, a passive index fund, an actively managed fund, a non-capitalization weighted index fund, a capitalization weighted index fund, an equal weighted indexed fund, an international fund, a sector fund, an asset, a liability, an accounting data based index (ADBI) fund, a portfolio of assets tracking an index, a portfolio of assets tracking S&

P indexes, Russell indexes, Dow Jones indexes, Morgan Stanley indexes, Lehman indexes, Wilshire indexes, composite indexes, Morgan Stanley Capital International indexes, a portfolio of assets tracking an ADBI weighted index, a commodity, an option, a derivative trade, a long hedge, a short hedge, a swap, a futures contract, a hedge fund, and/or a negative weighting on any financial object.

14. The system of claim 11, wherein said lot selection rules comprise investment management rules.

15. The data processing system of claim 11, said program instructions further including:

receiving a plurality of requested trades;

selecting a plurality of lots for trade execution; and

aggregating any executed trades for reconciliation.

48. The system of claim 11, wherein said financial object comprises:

at least one unit of interest in at least one of;

an asset;

a liability;

a tracking portfolio;

a financial instrument and/or a security, wherein said financial instrument and/or said security denotes a debt, an equity interest, and/or a hybrid;

a derivatives contract, including at least one of;

a future, a forward, a put, a call, an option, a swap, and/or any other transaction relating to a fluctuation of an underlying asset, notwithstanding the prevailing value of the contract, and notwithstanding whether such contract, for purposes of accounting, is considered an asset or liability;

a fund; and

/or

an investment entity or account of any kind, including an interest in, or rights relating to;

a hedge fund, an exchange traded fund (ETF), a fund of funds, a mutual fund, a closed end fund, an investment vehicle, and/or any other pooled and/or separately managed investments.

16. A data processing system for managing one or more financial objects comprising:

a plurality of virtual portfolios of the financial objects with separate lots owned by one or more individual investors;

a computer-implemented lot matrix database associating a plurality of lots with said plurality of virtual portfolios each lot of said plurality of lots tradable regardless of initiator of purchase of said lot;

a processor; and

a memory coupled to said processor and having program instructions stored therein, said processor being operable to execute said program instructions, said program instructions including;

lot selection rules;

instructions receiving one or more requested trades; and

for each of said plurality of virtual portfolios, said system operative to perform the following;

for said requested trade;

said system operative to select a lot from said plurality of lots for execution of said requested trade using said lot selection rules, and said lot matrix;

instructions determining if said requested trade should be deferred using said lot matrix, taxation rules; and

said system operative to generate a deferred trade in a tax-managed sub-account if it is determined that said requested trade should be deferred; and

instructions further including selecting a deferred trade in a tax-managed sub-account for execution if it is determined that said deferred trade should no longer be deferred using said lot matrix and said taxation rules.

17. The system of claim 16, wherein the financial object comprises at least one of:

equity, debt, a bond, a stock, a financial instrument, a contract, a security, a contract, a mutual fund, an exchange traded fund (ETF), a fund of funds, an index fund, a passive index fund, an actively managed fund, a non-capitalization weighted index fund, a capitalization weighted index fund, an equal weighted indexed fund, an international fund, a sector fund, an asset, a liability, an accounting data based index (ADBI) fund, a portfolio of assets tracking an index, a portfolio of assets tracking S&

P indexes, Russell indexes, Dow Jones indexes, Morgan Stanley indexes, Lehman indexes, Wilshire indexes, composite indexes, Morgan Stanley Capital International indexes, a portfolio of assets tracking an ADBI weighted index, a commodity, an option, a derivative trade, a long hedge, a short hedge, a swap, a futures contract, a hedge fund, and/or a negative weighting on any financial object.

18. The system of claim 16, wherein said lot selection rules comprise investment management rules.

19. The data processing system of claim 16, said program instructions generating trades for execution from said selected lots;

and aggregating said generated trades for a virtual portfolio from the one or more virtual portfolios.

20. The data processing system of claim 16, the program instructions further including aggregating tax savings across said plurality of virtual portfolios for each of the one or more investors.

49. The system of claim 16, wherein said financial object comprises:

at least one unit of interest in at least one of;

an asset;

a liability;

a tracking portfolio;

a financial instrument and/or a security, wherein said financial instrument and/or said security denotes a debt, an equity interest, and/or a hybrid;

a derivatives contract, including at least one of;

a future, a forward, a put, a call, an option, a swap, and/or any other transaction relating to a fluctuation of an underlying asset, notwithstanding the prevailing value of the contract, and notwithstanding whether such contract, for purposes of accounting, is considered an asset or liability;

a fund; and

/or

an investment entity or account of any kind, including an interest in, or rights relating to;

a hedge fund, an exchange traded fund (ETF), a fund of funds, a mutual fund, a closed end fund, an investment vehicle, and/or any other pooled and/or separately managed investments.

21. A method of managing one or more financial objects, the method being executed on a data processing system, the method comprising:

managing a virtual portfolio of the financial objects comprising a collection of the financial objects managed collectively but tracked separately with separately-owned lots on behalf of a plurality of investors;

providing a computer database associating a plurality of holdings owned by each of said plurality of investors as tradable, regardless of initiator of purchase of a holding;

providing holding selection rules;

receiving a requested trade;

selecting a holding for trading from said plurality of holdings using said computer database, said holding selection rules, and said requested trade;

determining whether a trade using said holding should be deferred using said computer database and said holding selection rules; and

generating a deferred trade in a tax-managed sub-account associated with one investor of said plurality of investors using said holding if it is determined that said holding should be sold in order to realize a loss for said one investor, wherein a manager'"'"'s account is unaffected by said loss realized by sale of said holding.

22. The method of claim 21, further comprising generating an offsetting purchase of said holding if it is determined that enough time has passed to avoid a wash-sale violation.

23. The method of claim 22, further comprising:

generating an offsetting purchase of a temporary offsetting holding; and

generating a sale of said temporary offsetting holding when generating said offsetting purchase of said holding.

24. A data processing system for managing one or more financial objects comprising:

a virtual portfolio of the financial objects comprising a collection of the financial objects managed collectively but tracked separately with separate accounts on behalf of a plurality of investors;

a computer-implemented database associating a plurality of holdings owned by each of said plurality of investors, wherein a holding may be traded regardless of initiator of purchase of said holding;

a processor; and

a memory coupled to said processor and having program instructions stored therein, said processor being operable to execute the program instructions, the program instructions providing at least one holding selection rule;

receiving a requested trade;

selecting a holding for trading from said plurality of holdings using said computer-implemented database, said holding selection rule; and

said requested trade;

determining whether said trade using said holding should be deferred using said computer-implemented database and said holding selection rules; and

generating a deferred trade in a tax-managed sub-account associated with one investor of said plurality of investors using said holding if it is determined that said holding should be sold in order to realize a loss for said one investor, wherein a manager'"'"'s account is unaffected by said loss realized by sale of said holding.

25. The data processing system of claim 24, wherein the program instructions generate an offsetting purchase of said holding if it is determined that enough time has passed to avoid a wash-sale violation.

26. The data processing system of claim 25, the program instructions further generating an offsetting purchase of a temporary offsetting holding;

and generating a sale of said temporary offsetting holding when generating said offsetting purchase of said holding.

30. A method of managing one or more financial objects, the method being executed on a data processing system, the method comprising:

managing a plurality of virtual financial objects comprising a collection of the financial objects managed collectively but tracked separately with separately-owned lots on behalf of one or more investors;

providing a computer database associating a plurality of holdings owned by each of said one or more investors to separate managers in separate manager accounts wherein a holding may be traded regardless of initiator of purchase of said holding;

providing holding selection rules;

receiving a requested trade;

selecting said holding for trading from said plurality of holdings using said computer database, said holding selection rules, and said requested trade;

determining whether said trade using said holding should be deferred using said computer database and said holding selection rules; and

generating a deferred trade in a tax-managed sub-account associated with one investor of said one or more investors using said holding if it is determined that said holding should be sold in order to realize a loss for the investor, wherein a manager'"'"'s account is unaffected by said loss realized by sale of said holding.

31. The method of claim 30, further comprising generating an offsetting purchase of said holding if it is determined that enough time has passed to avoid a wash-sale violation.

32. The method of claim 31, further comprising:

generating an offsetting purchase of a temporary offsetting holding; and

generating a sale of said temporary offsetting holding when generating said offsetting purchase of said holding.

33. A method of managing one or more financial objects, the method being executed on a data processing system, the method comprising:

managing a plurality of virtual portfolios of financial objects comprising a collection of the financial objects managed collectively but tracked separately with separately-owned lots on behalf of a plurality of investors;

providing a computer database associating a plurality of holdings owned by each of said plurality of investors to separate managers in separate manager accounts wherein a holding may be traded regardless of initiator of purchase of said holding;

providing holding selection rules;

receiving a requested trade;

selecting said holding for trading from said plurality of holdings using said computer database, said holding selection rules, and said requested trade;

determining whether said trade using said holding should be deferred using said computer database and said holding selection rules; and

generating a deferred trade in a tax-managed sub-account associated with one investor of said plurality of investors using said holding if it is determined that said holding should be sold in order to realize a loss for the one investor, wherein a manager'"'"'s account is unaffected by said loss realized by sale of said holding.

34. The method of claim 33, further comprising generating an offsetting purchase of said holding if it is determined that enough time has passed to avoid a wash-sale violation.

35. The method of claim 34, further comprising:

generating an offsetting purchase of a temporary offsetting holding; and

generating a sale of said temporary offsetting holding when generating said offsetting purchase of said holding.

36. A data processing system for managing one or more financial objects comprising:

a plurality of virtual portfolios of financial objects comprising a collection of the financial objects managed collectively but tracked separately with separate accounts on behalf of one or more investors;

a computer-implemented database associating a plurality of holdings owned by each of said one or more investors, wherein a holding may be traded regardless of initiator of purchase of said holding;

a processor; and

a memory coupled to said processor and having program instructions stored therein, said processor being operable to execute the program instructions, the program instructions providing at least one holding selection rule;

receiving a requested trade;

selecting a holding for trading from said plurality of holdings using said computer-implemented database, said holding selection rule; and

said requested trade;

determining whether said trade using said holding should be deferred using said computer-implemented database and said holding selection rules; and

generating a deferred trade in a tax-managed sub-account associated with one investor of said one or more investors using said holding if it is determined that said holding should be sold in order to realize a loss for said one investor, wherein a manager'"'"'s account is unaffected by said loss realized by sale of said holding.

37. The data processing system of claim 36, wherein the program instructions generating an offsetting purchase of said holding if it is determined that enough time has passed to avoid a wash-sale violation.

38. The data processing system of claim 37, the program instructions further generating an offsetting purchase of a temporary offsetting holding;

and generating a sale of said temporary offsetting holding when generating said offsetting purchase of said holding.

39. A data processing system for managing one or more financial objects comprising:

a plurality of virtual portfolios of financial objects comprising a collection of assets managed collectively but tracked separately with separate accounts on behalf of a plurality of investors;

a computer-implemented database associating a plurality of holdings owned by each of said plurality of investors, wherein a holding may be traded regardless of initiator of purchase of said holding;

a processor; and

a memory coupled to said processor and having program instructions stored therein, said processor being operable to execute the program instructions, the program instructions providing at least one holding selection rule;

receiving a requested trade;

selecting a holding for trading from said plurality of holdings using said computer-implemented database, said holding selection rule; and

said requested trade;

determining whether said trade using said holding should be deferred using said computer-implemented database and said holding selection rules; and

generating a deferred trade in a tax-managed sub-account associated with one investor of said plurality of investors using said holding if it is determined that said holding should be sold in order to realize a loss for said one investor, wherein a manager'"'"'s account is unaffected by said loss realized by sale of said holding.

40. The data processing system of claim 39, wherein the program instructions generate an offsetting purchase of said holding if it is determined that enough time has passed to avoid a wash-sale violation.

41. The data processing system of claim 40, the program instructions further generating an offsetting purchase of a temporary offsetting holding;

and generating a sale of said temporary offsetting holding when generating said offsetting purchase of said holding.

42. A method of providing a computer-implemented trading platform for intercepting trades, coordinating trading and/or preventing offsetting trades of one or more financial objects, the method being executed on a data processing system, the method comprising:

managing a virtual portfolio of the financial objects wherein said virtual portfolio comprises a collection of the financial objects managed collectively but tracked separately with separately owned lots on behalf of a plurality of investors,

wherein the financial object comprises at least one of;

equity, debt, a bond, a stock, a financial instrument, a contract, a security, a contract, a mutual fund, an exchange traded fund (ETF), a fund of funds, an index fund, a passive index fund, an actively managed fund, a non-capitalization weighted index fund, a capitalization weighted index fund, an equal weighted indexed fund, an international fund, a sector fund, an asset, a liability, an accounting data based index (ADBI) fund, a portfolio of assets tracking an index, a portfolio of assets tracking S&

P indexes, Russell indexes, Dow Jones indexes, Morgan Stanley indexes, Lehman indexes, Wilshire indexes, composite indexes, Morgan Stanley Capital International indexes, a portfolio of assets tracking an ADBI weighted index, a commodity, an option, a derivative trade, a long hedge, a short hedge, a swap, a futures contract, a hedge fund, and/or a negative weighting on any financial object;

providing a computer database associating a plurality of lots owned by each of said plurality of investors and associating said plurality of lots as tradable regardless of initiator of the purchase of said plurality of lots;

providing lot selection rules comprising investment management rules comprising at least one of;

coordinating trades, enforcing compliance with policy, and/or preventing offsetting trades comprising avoiding both purchasing and selling the same lot;

receiving a requested trade; and

selecting a lot for trading from said plurality of lots using said computer database, said lot selection rules, and said requested trade.

43. A method of managing one or more financial objects, the method being executed on a data processing system, the method comprising:

managing a plurality of virtual portfolios of the financial objects with separate lots owned by one or more individual investors and tracked separately;

providing a computer-implemented lot matrix associating a plurality of lots with said plurality of virtual portfolios, each lot of said plurality of lots tradable regardless of initiator of purchase of said lot and associating said plurality of lots as separately owned by said one or more investors,

wherein the financial object comprises at least one of;

equity, debt, a bond, a stock, a financial instrument, a contract, a security, a contract, a mutual fund, an exchange traded fund (ETF), a fund of funds, an index fund, a passive index fund, an actively managed fund, a non-capitalization weighted index fund, a capitalization weighted index fund, an equal weighted indexed fund, an international fund, a sector fund, an asset, a liability, an accounting data based index (ADBI) fund, a portfolio of assets tracking an index, a portfolio of assets tracking S&

P indexes, Russell indexes, Dow Jones indexes, Morgan Stanley indexes, Lehman indexes, Wilshire indexes, composite indexes, Morgan Stanley Capital International indexes, a portfolio of assets tracking an ADBI weighted index, a commodity, an option, a derivative trade, a long hedge, a short hedge, a swap, a futures contract, a hedge fund, and/or a negative weighting on any financial object;

providing lot selection rules comprising investment management rules comprising at least one of;

coordinating trades, enforcing compliance with policy, and/or preventing offsetting trades comprising avoiding both purchasing and selling the same lot;

receiving a requested trade; and

for each of said plurality of virtual portfolios, performing the following;

for said requested trade, selecting a lot from said plurality of lots for execution of said requested trade using said lot selection rules, and said lot matrix.

44. A data processing system for managing one or more financial objects comprising:

a virtual portfolio of the financial objects wherein said virtual portfolio comprises a collection of the financial objects managed collectively but tracked separately with separately owned lots on behalf of a plurality of investors,

wherein the financial object comprises at least one of;

equity, debt, a bond, a stock, a financial instrument, a contract, a security, a contract, a mutual fund, an exchange traded fund (ETF), a fund of funds, an index fund, a passive index fund, an actively managed fund, a non-capitalization weighted index fund, a capitalization weighted index fund, an equal weighted indexed fund, an international fund, a sector fund, an asset, a liability, an accounting data based index (ADBI) fund, a portfolio of assets tracking an index, a portfolio of assets tracking S&

P indexes, Russell indexes, Dow Jones indexes, Morgan Stanley indexes, Lehman indexes, Wilshire indexes, composite indexes, Morgan Stanley Capital International indexes, a portfolio of assets tracking an ADBI weighted index, a commodity, an option, a derivative trade, a long hedge, a short hedge, a swap, a futures contract, a hedge fund, and/or a negative weighting on any financial object;

a computer database adapted to associate a plurality of lots of said plurality of investors and adapted to associate said plurality of lots as tradable regardless of initiator of the purchase of one of said plurality of lots;

a processor; and

a memory coupled to said processor and having program instructions stored therein, said processor being operable to execute said program instructions, said program instructions including;

lot selection rules comprising investment management rules comprising at least one of;

coordinating trades, enforcing compliance with policy, and/or preventing offsetting trades comprising avoiding both purchasing and selling the same lot; and

instructions being adapted to receive a requested trade; and

adapted to select a lot for trading from said plurality of lots using said computer database, said lot selection rules, and said requested trade.

45. A data processing system for managing one or more financial objects comprising:

a plurality of virtual portfolios of the financial objects with separate lots owned by one or more individual investors,

wherein the financial object comprises at least one of;

equity, debt, a bond, a stock, a financial instrument, a contract, a security, a contract, a mutual fund, an exchange traded fund (ETF), a fund of funds, an index fund, a passive index fund, an actively managed fund, a non-capitalization weighted index fund, a capitalization weighted index fund, an equal weighted indexed fund, an international fund, a sector fund, an asset, a liability, an accounting data based index (ADBI) fund, a portfolio of assets tracking an index, a portfolio of assets tracking S&

P indexes, Russell indexes, Dow Jones indexes, Morgan Stanley indexes, Lehman indexes, Wilshire indexes, composite indexes, Morgan Stanley Capital International indexes, a portfolio of assets tracking an ADBI weighted index, a commodity, an option, a derivative trade, a long hedge, a short hedge, a swap, a futures contract, a hedge fund, and/or a negative weighting on any financial object;

a computer-implemented lot matrix database associating a plurality of lots with said plurality of virtual portfolios each lot of said plurality of lots tradable regardless of initiator of purchase of said lot;

a processor; and

a memory coupled to said processor and having program instructions stored therein, said processor being operable to execute said program instructions, said program instructions including;

lot selection rules comprising investment management rules comprising at least one of;

coordinating trades, enforcing compliance with policy, and/or preventing offsetting trades comprising avoiding both purchasing and selling the same lot; and

instructions receiving one or more requested trades; and

for each of said plurality of virtual portfolios, being adapted to perform the following;

for said requested trade;

said system operative to select a lot from said plurality of lots for execution of said requested trade using said lot selection rules, and said lot matrix.