How is Scripbox Portfolio Scan different from ‘Rebalancing’ feature you had earlier?
Rebalancing was the periodic process of aligning your portfolio to Scripbox recommendations by exiting funds we no longer recommend and reinvesting the amount you get into the current set of funds. Every time you exited a fund, we ensured that there was no cost incurred i.e., only long-term units were to be exited, hence there was no exit load or tax implications.
After introduction of long term capital gains in April 2018, we stopped doing this due to the high tax cost associated with exiting a fund.
Scripbox Portfolio Scan was launched in the same vein with an improved fund review algorithm and a phased exit and reinvestment strategy.
The algorithm simultaneously considers our view on the fund category, our view on the fund and the size of the holding to make exit recommendations. In fact, tax consideration (and therefore holding period) is now less relevant because the gap between short term tax and long term tax is now much narrower. Hence, we don’t account for taxes as part of our recommendations.