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PORTFOLIO DIVERSIFICATION OPTIMIZER

The Institute’s Mission Is To

Provide a highly advanced and affordable internet-based system to quickly and accurately measures the level of diversifiable risk present in an investment portfolio; then help determine if the measured risk complies with the diversification requirements of fiduciary law.  If diversification improvement is desired, it seamlessly guides users through a documented prudent process that integrates user customization and testing in portfolios exhibiting reduced diversifiable risk and/or increased anticipated “diversification alpha”  Also, we fulfill our mission without subjecting you to annoying 3rd party ads.

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The Process:

Algorithm: ANALYZE & OPTIMIZE

Member-User: CUSTOMIZE/ANALYZE & FINALIZE


The process is User-Driven and NOT a robo or black box. It starts with an existing portfolio, possibly one that has already been constructed using Modern Portfolio Theory (MPT) techniques of mean-variance efficient frontier optimization, Monte Carlo Simulation, etc. (Note -  when constraints are used in MPT optimization it often creates and exacerbates diversifiable risk problems.) Once analyzed, the system computes the portfolio’s Fiduciary (Diversification) Score by removing redundant information caused by disparate weightings and positive correlations. The Fiduciary (Diversification) Score is the metric for assessing compliance with fiduciary standards. The entire process from upload to having the Fiduciary (Diversification) Score and some world class portfolio analytics takes less than one minute.

Next, the system moves into its Optimization Stage creating six iterations of the existing portfolio by decreasing the legacy portion in increments of 10%, 20%, 30% 40%, 50% and 60%, respectively.  Millions of calculations later, the modeling algorithms produce recommend sub-sectors and/or industry proxies and their percentage allocations to achieve the best outcomes. From there the member would study the Correlations, Sharpe Ratios and other Performance Metrics provided by the system to decide what current portfolio constitutes might be reduced and replaced utilizing their own portfolio limitations and biases.  Then, in a few minutes Members can Analyze to see what the results might have been.  This testing can continue until a final allocation is decided on by the member-user.

The resulting improvements are presented in a report that documents the advisor’s prudent process, a necessary ingredient for fiduciary compliance.  From a marketing standpoint 'The Process' is used to show prospects how their existing portfolio’s risk/return management could improve under their stewardship.*see note below 

The platform, algorithms and optimizer are simple to use and as an Institute Member you will also have step-by-step assistance when help is needed. Once you become a Member you will have immediate access to the system and can easily upload your existing portfolio’s symbols and allocations from an Excel worksheet.   Then, with one left mouse click you can enjoy all the benefits of membership.  

The Institute plans to continually upgrade and expand the capabilities of the platform.  For instance, for those investing internationally access and optimization on data from all major world security markets will be available soon. 
:Note: The Process can also be used to analyze potential investment choices included in a sector, sub-sector, or industry by evaluating the performance metrics of constitutes within the proxy.

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