Settlement Change: What Does T+1 Mean?

On May 28th, U.S. markets made the switch to T+1 trade settlement, which was previously T+2 (trade date + 2 business days).

The shortening of the trade cycle aligns with the technological advancements and automation of today’s financial world. Although many investors may not notice this change, they will benefit from reduced risk and improved efficiencies in the markets. Any security that was formerly settled under T+2 will now fall under T+1, primarily impacting traditional stocks and exchange traded funds (ETFs).

You may find yourself asking, how does this impact my portfolio? In short, it does not affect the way that we view asset classes within your portfolio. Equities are still meant to be “buy and hold” securities, and we intentionally build liquidity into other classes within our models. However, this change does provide us with an additional level of flexibility when rebalancing and raising funds within portfolios.


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