Schwab Stock Slices allows one to specify a total dollar amount to invest in a basket of 1 to 30 stocks, currently limited to S&P 500 stocks, on an equal dollar basis per stock. One order executes all purchases at market price with no commissions and fractional shares are bought to balance the invested amount per stock. After the basket purchase, the basket no longer exists and each held stock is treated separately.
I am considering the use of Stock Slices to simplify rebalancing IRA ports that don’t use margin, which means that I sell all stocks being replaced before buying new replacements, so I know the total amount to be reinvested. My models assume an equal investment in each stock held, so that matches the slices approach except I haven’t previously purchased fractional shares for these models.
The concerns for me are (1) the use of market price rather than limit, which I normally use, and (2) the S&P500 as the universe. I would need to modify my models but don’t expect serious problems finding decent ones. The investments support my ongoing retirement so I’m not attempting to build an empire on extreme results.
Does anyone wish to share experience with market versus limit pricing in the execution of their ports? Any experience with Schwab Stock Slices or an equivalent with a different broker? Fractional shares to balance investment per stock? Good or bad thoughts on limiting to S&P 500 stocks (I do use separately funded gold, bond, and other investments as mild hedges).
I spent more than 20 years with folioFn before they stopped their retail offering. They offered fractional shares at two trading windows during the day. Over time the prices I believed averaged out. It helped when position size was $1,000 - $3,000, but switching to share amounts is a calculation using a few spreadsheet cells.
My large cap, top 10% of my universe, about 330 stocks has decent results about 36% alpha. When I plugged in the S&P 500 as a universe it didn’t even hit the S&P 500 equal weight return and mildly negative alpha. The primary difference being the foreign firms within the universe. I am leery sticking to the S&P 500 as a hunting ground.
Cheers,
Rich
Thanks for the pricing comparison, Rich. I might run a small test comparing current bid/ask to fill prices using Schwab’s basket buys. I usually just try to get a price midway between bid and ask on the fly without trying to squeeze extra margins.
For now, my exposure to non-USA stocks will probably be in international ETFs like VXUS. In fact, I consider such ETFs as potentially good hedges while the dollar slides, federal borrowing balloons, trade tariffs jump around daily, the US loses respect internationally, etcetera.
I know there’s lots of potential in non-USA stocks but don’t want to invest the time and money yet to feel comfortable with individual foreign stock models. The models I currently use start with USA All Fundamentals but get filtered down extremely. So far, it appears that the filtering I perform doesn’t reduce the S&P 500 quite as much, leaving enough stocks that might work decently with my selection rules.