A Model Portfolio Costruction Solution: Been There, Done That

As I said weeks ago, the works of Harry Markowitz, Fischer Black, and Robert Litterman framed the problem; and, thanks to them, we could start our work towards a solution.

Today, I’m proud of letting you know we have substantially completed the work on our model portfolio costruction solution.

How Our Model Portfolio Costruction Solution Was Born

Our work on a model portfolio costruction solution began months ago and we soon found we had to accelerate it, because of the strong interest shown by our partners in seeing the first prototypes of a model portfolio costruction solution that is integrated yet flexible enough to be improved in time, answering to modifications of the investment process.

We recognized a market behind specific requests; while small organizations aren’t usually interested in such a tool, and big banks and institutions tend to answer their needs internally, with a dedicated department, a whole segment of medium-sized organizations exists, in which outsourcing the operating risk of building a solution is preferable, but said solution must integrate well into the existing processes and systems.

What The Model Portfolio Costruction Solution Does

Our product basically allows to manage the analysis of either strategic and tactical asset location inputs, by using optimization approaches based, as I said at the beginning, on the mathematical methods developed by Markowitz and Black-Litterman.

The result is a reference portfolio, optimized according to the investment needs and capabilities of the investor. The reference portfolio is individually tailored, but it allows to cover needs of many investors with a similar profile, by applying the right adjustments.

Why We Are Happy With It

We’re proud of our work on this product because we feel we made much in a short timeframe. We needed to build a solution with deep analytical capabilities, able to effectively translate the abstract, mathematical underpinnings in sound financial suggestion that really make sense to an investor.

We did it, and we did it the Objectway way. The product is complex, yet we managed to develop a tablet interface for it in addition to the desktop one; and, we made it compatible with 90% of existing roboadvisors on the market. We have refinements on schedule for the first quarter of 2017; but, as of today, we can say version 1.0 is basically done.

Of course, we will give a lot of additional information about it during our second International Customer Conference in Amsterdam, next November, 23rd-24th. Even its actual product name. See you there!

 

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