Scientific Asset Management Solutions Can Increase Your Portfolio’s Profit And Decrease The Risk
Most of the existing robo-advisor company founders have their roots in sales or advertising of big banks and offer just some Algo’s to manage their customers’ accounts. This is different here as we have a deep knowledge in Algo development.
The Algorithm used to develop the portfolio in ITA platform is connected to a high end supercomputer and each portfolio is optimized and developed according to complex formulas on the supercomputer.
What is Asset Management?
Asset management is the process of investment in order to create wealth for future, every individual or institution needs asset management solutions, since it helps them to grow financially over the period.
How Does Asset Management Work? & What Does an Asset Manager Do?
Asset management is an allocation of investments into stocks, bonds, commodities and other type of investments such as real estate, private equities, etc. depending upon the risk profile of investor.
Asset Managers analyses the market and investor requirements, accordingly create an asset management plan depending upon investor’s risk taking capacity.
Asset management consultants diversify investment into Stocks which can be.
How Ways 2 Wealth Online Asset Management Tool Helps You
If you start to develop your portfolio (for example by clicking here: start building asset management portfolio) you will be asked to quantify your risk level on a scale of 1 to 20, by answering 6 basic questions. ITA provides you the details of optimal portfolio at your risk level and keeps you updated on the portfolio’s status on a daily basis.
We have built a comprehensive profile in the login area which provides you all the information about your asset management portfolio. For example, the interactive graphs will show you the entire historic performance of your portfolio, yearly risk assessment depicting the maximum loss and profit incurred through the years and your position on a risk-return profile.
Future projection (based on historic performance) is also made available for the next five years. The investors can freely register to make their portfolios and open an investment account with a broker of their own choice. No fee is charged for provision of strategic asset management portfolio details.
ITA provides the asset management services targeted towards European investors. European laws are different then United States or other parts of the world and require a careful handling of investor’s portfolio. Not using UCITS compliant funds can have negative legal consequences for the investor (we are going to write an article about it and give some examples from different countries).
ITA understands the European laws and hence all suggested portfolios and their constituent funds are UCITS compliant.
ITA Asset Management Portfolio
Exchange Traded Funds (ETFs) selection of ITA is actively done from a huge set of possible ETF’s where the right ETF are selected from a proprietary selection algorithm combined with a threshold when to bring in a new ETF in an existing portfolio.
The portfolios comprises of the best performing exchange traded funds (ETFs) tracking the most popular indices. The funds are managed by highly reputed companies including Black Rock (ishares) and Deutsche Asset Management (db x-trackers) whereas the choice of brokers is left to the clients.
The funds are shortlisted from a universe of over 4000 instruments based on a variety of parameters including European compliance, trading fee, trading volume/liquidity, mutual correlation, risk level, return profile and so on.
he shortlisted funds are then optimized using sophisticated supervised machine learning algorithms for each risk tolerance level. The risk-return profile of individual funds and the portfolios can be seen in the following figure.
Figure: The above figure shows the Risk–Return Profile of 12 exchange traded funds and the 20 optimal ITA Portfolios.
It can be seen that low risk & low return funds are the two European bonds on the bottom left corner whereas high risk-return funds can be found on the top-right side of the figure (e.g MDAX, TecDAX and Real estate funds). There are no ‘natural’in-between solutions comparable to the ITA recommendations.
Portfolios are constructed using the optimal combinations of these funds for each risk level. It can also be seen in the figure that all proposed portfolios are at much lower risk levels then the individual equity funds. These lower risk levels are achieved through diversification and optimization.
Asset Management Trick For Better Return With Reduced Risk
In general, the portfolios with lower risk tolerance level are assigned more proportion of lower risk funds (such as bonds) and vice versa. However the exact assignment is subject to numerous optimization parameters. The constituent proportions of each portfolio can be seen in the following figure.
FIGURE: The above figure depicts the area chart for 20 ITA portfolios. The X-axis depicts the risk levels whereas the Y-axis shows the percent split of each ETF. A higher area means more proportion in the Portfolio at that risk level. Low risk funds include bonds whereas high risk funds include MDAX, TecDAX, Dow Jones and Real estate ETF.
Low Risk Portfolios v/s High Risk Portfolios: It can be seen that in low risk portfolios the proportion/percent split (area) of low risk funds is more than the high risk funds. Whereas in high risk portfolios the proportion of high risk funds is more than the low risk funds.
RISK RETURN PROFILE OF THE ITA PORTFOLIO AGAINST DIFFERENT ETFS
The portfolios recommended are diversified and optimized using scientific approach. The superiority of our proposed portfolios can be visually seen in the following figure.
A comparison is drawn between diversified portfolio (see the red proposed portfolio) and a single fund. It can be seen that the return of portfolio is very much comparable to one of the highest return producing ETF tacking the Dow Jones.
In fact, in after years (e.g. 2014 2015) the portfolio was performing even better than individual fund. But the superiority of ITA portfolio is not the comparable return but is rather the highly reduced risk.
It can be seen in the risk-return comparison figure that the ITA portfolio has at much lower risk than the individual constituent funds. Any investor would be happy to invest his money in the portfolio which gives similar profits but have much lower risk levels.
Science can make a difference in trading. ITA is a blog made by Scientific Algorithm Developers and not by some sales persons. Use our free portfolio tool to develop a better portfolio.
The entire research staff of ITA has PhDs in their respective fields. The portfolios are constructed by human experts and are optimized using sophisticated machine learning algorithms.
If you want to build your portfolio you simply have to register to get updates on your portfolio. Our portfolio and Asset Management Tool is free and will stay free forever.
ITA is a free and non-commercial blog for asset management. The blog founders have a background as algorithmic trading and risk strategy developers and decided to give advance trading algorithms to public for free.