Hi Fabulous,

Thank you for raising the concern.

Unfortunately, you’re math is not correct.

1. When rebalancing, you do not trade your entire portfolio. Based on our simulations of the last year, the average amount that is traded during a rebalance that takes place every 1 day is 4.53% of your portfolio. This means you are only paying fees on the 4.53% that is traded during rebalancing. Since this is a 1 day rebalance period, we can assume the percent is much less for a 1 hour rebalance period. Essentially, with a 1 hour rebalance period, you will not even trade 12% of your portfolio over an entire day.
2. Percent degradation does not multiply such as you suggest. So, you’re equation for how much you would pay in fees is also incorrect. Even given the instance where you traded 100% of your portfolio every hour, you would still not lose 12% of your portfolio to fees.

Please let me know if you have any other concerns we can address.

The Shrimpy Team