Build more efficient strategies at varying risk levels using our advanced Portfolio Allocation tools.
Finding the optimal allocation of assets is fundamental and critical to the success of the investment process. Our flexible optimization methodologies improve your strategies performance by allowing you to optimize on a variety of user defined objectives and restrictions on multiple asset classes or funds. This degree of flexibility is made possible by combining advanced numerical analysis, linear and non-linear risk factors models, and un-smoothing methods.
Portfolio Allocation Process
Your portfolio allocation can be optimized following traditional approaches such as maximizing expected returns, Sharpe ratio (absolute expected mean-variance), information ratio (relative to a BMK return and risk), minimizing total risk or relative risk as well as by following risk parity strategies. For those objectives, our methodologies allow you to incorporate linear and non-linear constraints such as turnover (trading costs), tracking error budgets, asset or fund concentration limits, short sales, etc.
If you are working with different strategies for different risk preferences, our portfolio allocation tools can build you a set of efficient strategies for each level of risk that you define. That efficiency means that with our risk parity strategies or other methodologies we get the maximum return for a fixed level of risk.
Using our risk factor approach in the portfolio optimization allows you not only to reduce most of the diversified risk, but also improves the allocation of both passive and active funds. From our selection & replication techniques we discover the underlying risk factors in both passive and active funds, so the long-term benefits in risk-return from combining factors such as value, momentum, low volatility, quality, etc. can even be translated to a portfolio that does not have factors ETF’s as constituents.
Additionally, without changing a predefined core portfolio we can improve your portfolio performance by using our Portfolio Overlays which can be managed externally.
Another characteristic of our flexible allocation tools is that it allows us to optimize portfolios that include complex assets such as derivatives and credit spread products, for which probability distributions are far from normal. Additionally, our return un-smoother tool increments the frequency of the returns of illiquid investments such as hedge funds and private equities, allowing for a better estimation of their underlying risk and their co-movement with other assets, providing for a more precise allocation (based on better information) in diversified portfolios.
What are you waiting for?
Contact Cuantserv today and start making more informed investment decisions, better serve your clients precise investment objectives, and create new opportunities for your advisory firm, family office, or wealth management business.