Let's say you have a strategy that makes 30% a year. If you split that into two brokerage accounts instead of one, would you still earn around 30% per year? Does having holdings in 2 accounts affect performance? It should be similar I think right? That might just affect rebalancing as when you sell a poorly ranked company and buy holdings that are low you'd only be able to buy certain ones.
On a similar note, what if you took it a step further for convenience and had all CAD in one and all USD in another. My CAD and USD sims only does 20%/year in isolation versus 30%/year when together (because holdings rotate between the countries depending on valuations and growth). SO effectively you'd be getting the 20%/year in both accounts I think right?
Thanks! Hopefully that makes sense!
Two accounts won’t hurt returns if you mirror weights and rebalance together. The CAD‑vs‑USD split drags you to ~20 % because the CAD account is limited to CAD‑listed ideas and the USD account to USD‑listed ones, each is working with only a slice of the strategy’s full opportunity set. Restore the ~30 % by periodically shifting cash/FX between the two accounts and, if timing is tight, bridging briefly with margin.
Bottom line: Flexibility of capital matters far more than how many accounts you use.
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Hi Curtisbaker3 -
Only thing that comes to my mind is that if you trade one account after the other - and do so with some significant amount of capital - the buys and sells of your first might affect the results of your second. Assuming you trade a small amount, that wouldn't really be applicable though. Think you should be fine.
Best,
Victor
Good point Hedgehod - each working with just a slice of the strategy. I'm thinking the same would be impacting results. Amazing how much of a difference adding extra countries in can make.
Thanks Victor - Right buys in one might affect buy prices of the other - makes sense. For the capital i'm using it shouldn't be too big an issue.