What does a 'basket order' allow an investor to do?

A 'basket order' permits an investor to buy or sell multiple securities simultaneously, which is highly beneficial for efficiently managing a diversified portfolio. Instead of executing individual trades for each security, an investor can place a single order that encompasses a group of selected securities. This feature is particularly valuable for institutional investors and traders because it simplifies the process of entering or exiting positions in multiple assets at once.

By using a basket order, investors can achieve better execution prices and minimize transaction costs, as they can benefit from economies of scale. Moreover, this type of order aids in maintaining a balanced portfolio as it allows for quick adjustments across various assets in response to market conditions or investment strategy changes. This capability also ensures that the desired asset allocation is maintained without the delays that could occur when placing individual orders for each security.