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How do you determine the cash component in my portfolios?
QuietGrowth does not believe in keeping aside a portion of the portfolio value in cash in order to purchase the funds at the "right" time, because we think that it is almost impossible to time the markets consistently. That said, though QuietGrowth wishes to invest all the money you deposit to purchase the funds, we keep aside a small amount of uninvested cash in each of your portfolios for various reasons.
One reason is that we purchase only whole units of ETFs for you. This results in some amount of cash being left out.
Another reason is that we ensure that sufficient amount of cash is available to pay for the QuietGrowth fees charged every month over a period of at least one year. As the QuietGrowth fees is calculated based on the portfolio value, and we cannot predict the future portfolio value, the amount of cash we keep aside for this purpose is an approximation.
One more reason is that even though QuietGrowth absorbs the trading costs incurred to purchase funds and does not charge the client for these costs incurred, we are mindful of these costs too, and hence we execute a buy trade only when the dollar amount of that trade is of a meaningful amount.