Excluding Assets
Excluding assets ensures the asset which has been excluded will not become allocated in the index. If the excluded asset falls within the index range such that it would have been allocated if it had not been excluded, the asset will be replaced with the asset of the next highest ranking.
Imagine we have an index of the top 10 assets. The current portfolio would look as follows:
· Rank 1
· Rank 2
· Rank 3
· Rank 4
· Rank 5
· Rank 6
· Rank 7
· Rank 8
· Rank 9
· Rank 10
Now, let’s say we want to exclude the asset which is currently rank 5. The resulting index for our portfolio would be the following:
· Rank 1
· Rank 2
· Rank 3
· Rank 4
· Rank 6
· Rank 7
· Rank 8
· Rank 9
· Rank 10
· Rank 11
Notice how Rank 5 is no longer in the index, however “Rank 11” has now been included. This allows us to keep 10 assets in our portfolio, even when an asset has been excluded.
Including Assets
In contrast to excluding assets, there are times when you will want to include an asset. This allows for the selection of a range of assets, but also include assets in the index which may be of specific interest to you. They may be inside or outside the range of the index. Including an asset means no matter where this asset’s ranking lies, whether it drifts inside or outside the index range, and regardless of price changes, it will be included in the index.
An example of this feature in action would be if you wanted to create an index of the top 5, but you also wanted to include DOGE because it holds a special place in your heart. The index would look like the following:
· Rank 1
· Rank 2
· Rank 3
· Rank 4
· Rank 5
· DOGE
Notice: Rank 1 - 5 are included in the portfolio as well as DOGE. That means there are 6 total assets which will be added to the portfolio during portfolio allocation.