Optimize portfolio allocations by aligning them with your clients’ risk-reward appetite against an efficient frontier. Choose from a range of strategies to create a well-balanced and efficient portfolio, including maximizing the Sharpe Ratio, minimizing Standard Deviation, targeting a specific return, or targeting a desired level of Standard Deviation.
How to Create an Optimized Portfolio:
1. Hover over Tools, then select Portfolio Optimizer.
2. Search for a portfolio at the top.
3. Enter max and min weights to ensure proper optimization. If you'd like to apply a band around the target weights use the Weight Band option. To apply a weight to all holdings select Apply to all under the first holding.
4. Enter a date range for the lookback period.
5. Select one of the strategies in the Strategy section.
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Maximize Sharpe Ratio: This strategy aims to find the portfolio with the highest risk-adjusted return, also known as the tangency portfolio. The Sharpe ratio measures the return earned per unit of risk taken, allowing investors to find investments with the best risk-return tradeoff.
Target Return: This strategy aims to minimize your portfolio performance volatility for a given target return.
Target Standard Deviation: This strategy aims to maximize portfolio return for a given target risk (standard deviation).
Minimize Standard Deviation: This strategy aims to optimize the portfolio by minimizing its overall risk. By reducing the volatility (standard deviation) in the investment performance, it helps create a more stable and predictable portfolio.
6. Select Calculate.
