Starting capital

Also seen as: initial capital, initial portfolio value

Does starting capital change a strategy's results?

Not in percentage terms. A strategy's rules do not depend on how much money is behind them, so the same rules over the same period produce the same percentage outcome at any capital; only the money amounts scale.

where total return is the strategy's return over the period as a fraction (so +45% is 0.45) and starting capital is the amount you set. Because the return is the same on both sides, the money figures move in exact proportion to the capital.

When does starting capital actually matter?

It matters at small capital, because a portfolio can only hold whole shares. Each holding's ideal money amount is its target notional, and that amount has to be rounded down to a whole number of shares, leaving a little cash unspent — see target vs deployed. That leftover is a fixed size per holding but a much bigger slice of a small portfolio, so at low capital more of the target goes unfilled, accuracy is lower, and a high-priced instrument may not fit at its intended weight at all. At large capital the same rounding is negligible. The rounding is redone at every rebalance, so at low capital the shortfall recurs rather than being a one-off at the start. What happens to cash the strategy is not holding in positions is covered by interest received and paid.

Defaults in Fincanva

• The default starting capital is 100,000, and the setting offers a fixed ladder of ten amounts from 10,000 up to 10,000,000. Each option is displayed in your base currency.
• Starting capital is part of what identifies a simulation, so changing it means the results for your own strategies are recomputed on the new amount rather than converted.
• A public strategy you do not own is always computed on the default 100,000, whatever your own setting is — so its money figures will not match the ones you would get by copying it and running it yourself. Its percentages will.
• The Holdings view has its own Capital input for the target snapshot it shows — a different control, not this setting under another name. It starts at 100,000 rather than following your Starting capital setting, and changing it rescales that view only: the saved setting and the saved run are untouched.

Worked example

Take the same strategy over the same period, once with 10,000 of starting capital and once with 100,000. Suppose it returns +45% over the period. The first run ends at 14,500 with a profit of 4,500; the second ends at 145,000 with a profit of 45,000 — ten times the money, the identical +45%, and the identical drawdown and volatility figures. The one real difference shows in the holdings: at 100,000 a 10% weight is 10,000, which buys 24 shares of an instrument trading at 412 and leaves 112 unspent; at 10,000 the same 10% weight is 1,000, which buys 2 shares and leaves 176 unspent — nearly 18% of that holding's target left in cash instead of 1%.

The figures on this page describe what Fincanva models, not what you should do with your money — see Is this financial advice?.