Drift determination in multi-style managed client investment account

• US 7,809,624 B1
• Filed: 02/25/2003
• Issued: 10/05/2010
• Est. Priority Date: 02/25/2003
• Status: Active Grant

• Current Assignee: Tegra118 Wealth Solutions, Inc.
• Original Assignee: Checkfree Corporation (Fiserv Incorporated)
• Inventors: Ponce, Danette Kay, Derstine, Heidi Renee, Smith, Charles Raymond III, Zyvith, Lavinia Shao-Hui, Ristovic, Mirjana, Gonzales, Reo A., Everett, Michael John
• Primary Examiner(s): Kalinowski; Alexander
• Assistant Examiner(s): Ebersman; Bruce I
• Application Number:
  US10/372,647
• Time in Patent Office: 2,779 Days
• Field of Search: 705/36.T
• US Class Current: 705/36.00R
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A processor and system are provided for determining drift in an investment account having assets associated with a plurality of investment styles. An actual asset allocation of at least one portion of the investment account is determined. The at least one portion of the investment account includes both cash assets and security assets. The actual asset allocation of the at least one portion of the investment account is compared to an allocation rule. A drift of assets associated with the at least one portion is determined based on the comparison. A rebalancing of the investment account may occur based on the determined drift.

Claims

1. A method, comprising:

determining, by an overlay manager computing system comprising one or more computers, a respective market value for each of a plurality of investment styles of an investment account, wherein each investment style includes a respective cash bucket and respective one or more securities, wherein the respective value for each investment style is determined based upon a respective market valuation of a respective cash balance associated with the respective cash bucket and the respective one or more securities in the respective investment style, wherein the investment account is managed with an overlay model that includes (i) an across-style model allocation specifying cumulative asset allocations among the plurality of investment styles, and (ii) a plurality of style models, wherein each of the plurality of style models specifies allocation weightings for individual assets of the respective investment style of the plurality of investment styles, wherein information for each of the plurality of style models included within the overlay model is received from a respective money manager for the respective investment style associated with the respective style model;

determining, by the overlay manager computing system, at least one respective drift value for each investment style from the across-style model allocation using the determined respective market value for the respective investment style, wherein the determination of the at least one respective drift value for each investment style of an investment account is initiated based upon one or more of (i) passage of time, (ii) receipt of a new deposit for the investment account, (iii) receipt of a purchase request for the investment account, or (iv) receipt of a sell request for the investment account; and

rebalancing, by the overlay manager computing system, the investment account to reduce the determined at least one respective drift value for one or more of the plurality of investment styles, wherein the rebalancing comprises transferring an amount of cash between respective cash buckets of two investment styles of the plurality of investment styles, wherein the rebalancing further comprises transferring an amount of a security between two investment styles of the plurality of investment styles, wherein respective amounts of the transferred cash and the transferred security are in accordance with at least one style model associated with investment styles involved in the transfer of the respective amount of cash or security,

wherein the investment account is associated with a custodian account serving as an authority of record for the investment account, and wherein the transfers of the respective amounts of transferred cash and the transferred security are not reflected in the custodian account.

2. The method of claim 1, wherein the plurality of investment styles includes at least a first investment style and a second investment style, wherein the respective amount of the cash is transferred from the first investment style to the second investment style, wherein at least a portion of the respective amount of the transferred cash is obtained from a sale of at least a portion of one or more first securities of the first investment style.

3. The method of claim 1, wherein rebalancing the investment account includes rebalancing the investment account to reduce the at least one respective drift value such that the respective market value for each investment style is within a predetermined range from a respective target value based upon the across-style model allocation.

4. The method of claim 3, wherein the predetermined range is a predetermined percentage range.

5. The method of claim 1, further comprising:

storing, by the overlay manager computing system, records for account funds and account transactions transacted in accordance with the plurality of investment styles.

6. The method of claim 5, wherein determining the respective market value for each investment style comprises aggregating at least a portion of the account funds and at least a portion of the ones of the account transactions that are associated with the respective investment style.

7. The method of claim 6, wherein the aggregated portion of the account funds includes unallocated cash for the respective investment style, and wherein the account transactions that are associated with the respective investment style include one or more of respective cash deposit transactions, respective cash withdrawal transactions, respective dividend transactions, respective interest transactions, respective purchase transactions, or respective sale transactions.

8. The method of claim 6, wherein the account funds are subdivided into a plurality of fund sub-portions each associated with a respective investment style of the plurality of investment styles.

9. The method of claim 8, wherein the plurality of fund sub-portions are designated as being associated with the respective investment style of the plurality of investment styles using a style identifier.

10. The method of claim 1, wherein each style model specifies a respective first target amount for respective cash and respective second target amounts for each respective security in the respective investment style associated with the respective style model.

11. The method of claim 10, wherein the first target amount or the second target amount is a target percentage weight.

12. A system, comprising:

a database configured to store an investment account having a plurality of investment styles, where each investment style includes a respective cash bucket and respective one or more securities; and

a processor adapted to access the database and configured to;

determine a respective market value for each of the plurality of investment styles based upon a respective market valuation of a respective cash balance associated with the respective cash bucket and the respective one or more securities in the respective investment style, wherein the investment account is managed with an overlay model that includes (i) an across-style model allocation specifying cumulative asset allocations among the plurality of investment styles, and (ii) a plurality of style models, wherein each of the plurality of style models specifies allocation weightings for individual assets of the respective investment style of the plurality of investment styles, wherein information for each of the plurality of style models included within the overlay model is received from a respective money manager for the respective investment style associated with the respective style model,

determine at least one drift value for each investment style from the across-style model allocation using the determined market value for the respective investment style, wherein the determination of the at least one respective drift value for each investment style of an investment account is initiated based upon one or more of (i) passage of time, (ii) receipt of a new deposit for the investment account, (iii) receipt of a purchase request for the investment account, or (iv) receipt of a sell request for the investment account, and

rebalance the investment account to reduce the determined at least one respective drift value for one or more of the plurality of investment styles, wherein the investment account is rebalanced by transferring an amount of cash between two investment styles of the plurality of investment styles, wherein the rebalancing further comprises transferring an amount of a security between two investment styles of the plurality of investment styles, wherein respective amounts of the transferred cash and the transferred security are in accordance with at least one style model associated with investment styles involved in the transfer of the respective amount of cash or security,

wherein the investment account is associated with a custodian account serving as an authority of record for the investment account, and wherein the transfers of the respective amounts of transferred cash and the transferred security are not reflected in the custodian account.

13. The system of claim 12, wherein the plurality of investment styles includes at least a first investment style and a second investment style, wherein the respective amount of the cash is transferred from the first investment style to the second investment style, wherein at least a portion of the respective amount of the transferred cash is obtained from a sale of at least a portion of one or more first securities of the first investment style.

14. The system of claim 12, wherein the processor is adapted to rebalance the investment account to reduce the at least one respective drift value such that the respective market value for each investment style is within a predetermined range from a respective target value based upon the across-style model allocation.

15. The system of claim 14, wherein the predetermined range is a predetermined percentage range.

16. The system of claim 12, wherein the database is further configured to store records for account funds and account transactions transacted in accordance with the plurality of investment styles.

17. The system of claim 16, wherein the processor is adapted to determine the respective market valuation for each investment style by aggregating at least a portion of the account funds and at least a portion of the ones of the account transactions that are associated with the respective investment style.

18. The system of claim 17, wherein the aggregated portion of the account funds includes unallocated cash for the respective investment style, and wherein the account transactions that are associated with respective investment style include one or more of respective cash deposit transactions, respective cash withdrawal transactions, respective dividend transactions, respective interest transactions, respective purchase transactions, or respective sale transactions.

19. The system of claim 17, wherein the account funds are subdivided into a plurality of fund sub-portions each associated with a respective investment style of the plurality of investment styles.

20. The system of claim 19, wherein the plurality of fund sub-portions are designated as being associated with the respective investment style of the plurality of investment styles using a style identifier.

21. The system of claim 12, wherein each style model specifies a respective first target amount for respective cash and respective second target amounts for each respective security in the respective investment style associated with the respective style model.

22. The system of claim 21, wherein the first target amount or the second target amount is a target percentage weight.

23. A system, comprising:

means for determining a respective market value for each of a plurality of investment styles of an investment account, where each investment style includes a respective cash bucket and respective one or more securities, wherein the respective value for each investment style is determined based upon a respective market valuation of a respective cash balance associated with the respective cash bucket and the respective one or more securities in the respective investment style, wherein the investment account is managed with an overlay model that includes (i) an across-style model allocation specifying cumulative asset allocations among the plurality of investment styles, and (ii) a plurality of style models, wherein each of the plurality of style models specifies allocation weightings for individual assets of the respective investment style of the plurality of investment styles, wherein information for each of the plurality of style models included within the overlay model is received from a respective money manager for the respective investment style associated with the respective style model;

means for determining at least one respective drift value for each investment style from the across-style model allocation using the determined respective market value for the respective investment style, wherein the determination of the at least one respective drift value for each investment style of an investment account is initiated based upon one or more of (i) passage of time, (ii) receipt of a new deposit for the investment account, (iii) receipt of a purchase request for the investment account, or (iv) receipt of a sell request for the investment account; and

means for rebalancing the investment account to reduce the determined at least one respective drift value for the one or more investment styles, wherein the rebalancing comprises transferring an amount of cash between two investment styles of the plurality of investment styles, wherein the rebalancing further comprises transferring an amount of a security between two investment styles of the plurality of investment styles, wherein respective amounts of the transferred cash and transferred security are in accordance with at least one style model associated with investment styles involved in the transfer of the respective amount of cash or security,

wherein the investment account is associated with a custodian account serving as an authority of record for the investment account, and wherein the transfers of the respective amounts of transferred cash and the transferred security are not reflected in the custodian account.